Smartworks DRHP: FY24 Loss Declines 51% To INR 50 Cr, Revenue Crosses INR 1,000 Cr Mark

IPO-bound Smartworks’ net loss narrowed 51% to INR 49.8 Cr in the financial year 2023-24 (FY24) from INR 101.02 Cr in the previous year on the back of a strong business growth.

The startup, which recently filed its draft red herring prospectus (DRHP) for its IPO, saw its revenue from operations cross the INR 1,000 Cr mark during the year under review. Smartworks’ operating revenue zoomed 46% to INR 1,039.4 Cr in FY24 from INR 711.4 Cr in the previous fiscal year.

Founded in 2016 by Neetish Sarda and Harsh Binani, Smartworks is a shared workspace provider that offers customisable coworking solutions for enterprises.

At INR 997.1 Cr, the startup earned 96% of its revenue from lease rentals. This was an increase of 45% from INR 687.5 Cr it earned from lease rentals in FY23. Besides, it earned INR 42 Cr revenue from ancillary services in the last fiscal year.

Including other income, total income stood at INR 1,113.1 Cr in FY24 as against INR 744.1 Cr in the previous fiscal year.

Where Did Smartworks Spend?

The coworking startup’s total expenses rose over 34% to INR 1,180.7 Cr in FY24 from INR 880.2 Cr in the previous fiscal year, with operating expenses continuing to account for the largest portion.

Operating Expenses: The startup’s operating expenses increased 38% to INR 303 Cr in FY24 from INR 220.1 Cr in FY23.

The operating expenses primarily comprise housekeeping, security, support services, plantation and pest control, electricity and water charges, building maintenance, equipment and asset hire charges, commission and brokerage, communication expenses, lease rentals, freight and transportation and parking space charges.

The startup spent INR 34.9 Cr on commission and brokerage expenses, which it mentioned in its DRHP as one of the major cost drivers.

Finance Costs: In FY24, Smartworks spent INR 328.3 Cr on finance costs, an increase of 39% from INR 236.7 Cr in FY23. The finance costs primarily comprise interest expenses on lease liabilities, borrowings and financial liabilities and other finance costs such as interest on asset retirement obligations and others.

Employee Benefit Expenses: Employee costs increased 22%% to INR 49.6 Cr during the year under review from INR 40.8 Cr in FY23.

Smartworks had 651 employees as of March 31, 2024 against 564 employees a year ago, as per the DRHP.

A Quick Look At Smartworks IPO Plans

Smartworks IPO will comprise a fresh issue of equity shares worth INR 550 Cr and an offer for sale (OFS) component of 67.49 Lakh equity shares.

The net proceeds from the fresh issue will be used for capital expenditure related to fit-outs in the new centres, security deposits for the new centres, and other general corporate purposes. Additionally, the proceeds will be allocated towards the repayment, prepayment, or redemption of certain borrowings.

The startup also intends to raise INR 110 Cr through a pre-IPO placement prior to filing its red herring prospectus (RHP).

Smartworks currently operates over 8 Mn sq. ft. of office space across 40+ locations spanning 14 cities, including Bengaluru, Kolkata, Delhi NCR and Mumbai. It claims to cater to more than 600 enterprises, including Honeywell, Starbucks Coffee, DHL, and Moglix.

The startup competes against the likes of Awfis, WeWork India and IndiaQube.

Amid the IPO boom in the Indian equities market, a number of startups have gone public recently and many others are in the process of going public. Smartworks’ rival Awfis made its public market debut in May this year. Its shares listed at INR 432.25 apiece on the BSE, a premium of 12.8% to the issue price.