IIFL Securities Initiates ‘Buy’ On Awfis, Sees 40% Upside

Brokerage firm IIFL Securities has initiated its coverage of coworking space startup Awfis with a ‘buy’ rating. The firm gave Awfis’ shares a price target (PT) of INR 980 to be achieved in a 12-month period. 

The PT represents a near 40% upside from the company’s closing price of INR 700.75.

In its reasoning for the steep PT, IIFL Securities said that it estimates a near 55% (CAGR)compounded annual growth rate growth in Awfis’ (EBITDA) earnings before interest, taxes, depreciation, and amortization and a sharp improvement in return on equity (ROE) between a time frame of FY24 and FY27. 

It also said that the company’s EBITDA margins improvement for the first two quarters and the first half of the ongoing financial year FY25 has been above management guidance. 

Further, IIFL also observed that Awfis is the “first and only listed pure play” in the flexible workspaces segment and believes that its area share will increase up to 12% by FY27. 

“Over FY24-27, we will build an EBITDA CAGR of 58%, driven by 33% CAGR in seat addition, occupancy management and operating leverage driving steady improvements in EBITDA margins and doubling of revenues from the design and build business and other ancillary services,” the brokerage said in its report. 

It is pertinent to mention that Awfis, which got listed in May, has largely been on a bull run for the better part of the year. Its shares have rallied about 60% from its listing price of INR 432.25. 

Awfis posted a consolidated net profit of INR 38.67 Cr in the September quarter of the financial year 2024-25 (Q2 FY25) as against a net loss of INR 4.34 Cr in the year-ago period, on the back of healthy growth in its business.

On a quarter-on-quarter basis, net profit increased multifold from INR 2.78 Cr.

It is pertinent to note that Awfis booked an exceptional gain of INR 24.01 Cr during the quarter under review due to the sale of its facility management division Awfis Care to SMS Integrated Facility Services.

This comes at a time when the coworking space provider is on an expansion spree. In August, Awfis also 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.

The shares opened at 702.60 and went up 3.8% to 729.95 with a previous close of 700.75.