ICICI Securities Upgrades Awfis To ‘Buy’, Ups PT To INR 839

SUMMARY

ICICI Securities has increased its PT for Awfis by 11% to INR 839 from from INR 757 in July when it initiated coverage of the stock

The brokerage cited Awfis’ improving financial performance and expansion as the major reasons behind the bullish outlook

Earlier this month, Nuvama gave Awfis a ‘Buy’ rating along with a PT of INR 1,013

Amid listed coworking space provider Awfis’ expansion spree, brokerage firm ICICI Securities has increased its price target (PT) for the startup by 11% to INR 839 from INR 757 in July when it initiated coverage of the stock.

Besides the increase in PT, ICICI Securities also upgraded Awfis’s rating to ‘Buy’ from ‘Add’ earlier.

At 03:00 PM, shares of Awfis were trading 3.7% higher at INR 734.25 on the BSE. The new PT is over 14% higher than the last trading price of the stock.

Citing the rationale for the increase in PT, ICICI Securities said that the startup delivered on its two main FY25 guidance parameters – over 30% revenue growth for FY25 and expansion in IGAAP EBITDA margin between 11.5-12% – in the first quarter of the ongoing fiscal year (Q1 FY25).

“With an overall operational positive committed pipeline of 1,27,726 seats (over 1,00,000 operational), we expect continued growth ahead. We estimate 35% operational seat CAGR, 30% revenue CAGR and 48% IGAAP EBITDA CAGR (EBITDA post lease payments) over FY24-27E,” it said.

It is pertinent to mention that Awfis recently announced the launch of two new centres at Bengaluru and plans to set up an additional 3 Lakh square feet of Grade-A workspace in Pune.

Awfis currently operates over 1 Lakh seats and plans to add another 40,000 seats this year.

The brokerage’s report comes a few days after the startup announced that it has entered into a business transfer agreement with SMS Integrated Facility to sell its facility management business ‘Awfis Care’.

ICICI Securities noted that the transaction will lead to freeing up of working capital while facilities management will continue to be handled by SMS.

Earlier this month, brokerage Nuvama also gave Awfis a ‘Buy’ rating and a PT of INR 1,013.

Nuvama expects favourable market dynamics, capital-efficient expansion, improving cost management, strong balance sheet, and stable management to play out in the startup’s favour moving forward.

Since making its public market debut in May at a share price of INR 432.25, shares of Awfis have soared over 65%. Its market cap stands at about $600 Mn (about INR 5,000 Cr).