Is AWFIS Space Solutions The Next Big Space Stock?
Table of content
Industry Overview: India Macroeconomic Overview
- India is the world’s fifth-largest economy.
- Gross domestic product (“GDP”) and Growth Rate India is one of the fastest growing and the fifth-largest economy in the world for 2023, according to the International Monetary Fund (“IMF”). For 2023, India had a Gross Domestic Product (“GDP”) growth rate of 7.8%
- Contribution of Services Sector to the GDP
- The services sector led by technology and financial services continues to be the key driver of the Indian economy—it represented 53% of Fiscal 2023 Gross Value Added (“GVA”) and it has grown at a compound annual growth rate (“CAGR”) of 6.5% over 2014-23.
- Major Structural Reforms by Indian Government to Fuel Economic and Real Estate Growth
- Amendment to Special Economic Zone (SEZ) Rules, 2006 (Denotification):
- Make in India, 2014
- Goods and Services Tax, 2017 (“GST”)
- Real Estate Regulation and Development Act, 2016 (“RERA”)
- International Trade and Foreign Investments in Real Estate
- Factors Propelling Growth of Indian Office Market
- Favorable Demographic
- Continued Infrastructure Development
- Foreign Investment
- China + 1 Strategy
Indian Office Market Overview
| Particulars | Bengaluru | MMR | Hyderabad | Gurgaon | Chennai | Pune | Noida | Kolkata | Delhi | Total |
| Total Stock as of December 31, 2023(million sq. ft.) | 215.7 | 144.6 | 126.8 | 89.3 | 87.2 | 75.9 | 45.4 | 35.0 | 15.0 | 832.0 |
| Occupied Stock as of December 31, 2023(million sq. ft.) | 182.0 | 112.8 | 90.3 | 59.4 | 71.3 | 60.4 | 29.3 | 21.5 | 10.6 | 637.6 |
| Vacancy as of December 31, 2023 (%) | 15.5% | 22.0% | 27.2% | 33.8% | 18.1% | 20.4% | 35.6% | 38.1% | 29.4% | 23.4% |
| Annual Absorption Avg. 2014 – 23(million sq. ft.) | 15.1 | 6.7 | 7.9 | 5.4 | 5.3 | 5.5 | 2.5 | 0.8 | 0.7 | 49.7 |
| Market Rents* as of December 31, 2023 (persq. ft. / month) | 88.3 | 129.3 | 65.6 | 96.5 | 77.6 | 76.1 | 54.1 | 58.7 | 203.2 | 94.4 |
AWFIS Space Solutions Background:
Here’s a rundown on Awfis Space Solutions, a leading co-working space provider in India:
Background
- Founded in 2014 by Amit Ramani
- Public company headquartered in Delhi, India
- Largest flexible workspace solutions company in India by number of centers (as of Dec 31, 2023)
Services
- Offers a variety of workspace solutions including co-working spaces, private cabins, meeting rooms, and virtual offices
- Caters to various client needs, from single seats to customized office spaces for startups, SMEs, large corporations, and MNCs
- Provides flexible workspace solutions with durations ranging from an hour to several years
Growth
- Started in Delhi and expanded to 16 cities across India
- Early expansion into Tier 2 cities like Jaipur and Indore helped establish a strong presence
Main objects of the AWFIS Space Solutions:
- To provide workspace solutions including shared work space, co-working workspace, business centre services, office solutions, personal workstations, meeting rooms, conference rooms, etc
- To establish, operate, manage, control, wind up or otherwise deal in any manner with fully or partly furnished, staffed and equipped business centers comprising one or more individual offices, serviced office, commercial and residential accommodation and offering all ancillary business services relating to the same.
- To provide incubation services, business planning services, formulating market strategies, providing full support in operationalizing business plans, including team building, providing strategic and operational guidance, marketing, promotion, training and development programmes to entrepreneurs, to process the development of strategic tie-ups with other incubators, corporates, research and development labs, industry associations to be able to provide comprehensive support to the incubatees.
- To create web and mobile applications for commercial office space use and to provide a web based platform for just in time space reservations for co-working, meeting rooms, conference rooms, offices, desks, business centers and to create a virtual community to connect designers, builders and users for office and commercial space and sell products through a social network medium.
- To carry on in India and abroad the business of rendering services in office space, construction, furnishing, running and management of business and also of operating, establishing, providing and managing e-commerce and m-commerce websites.
- To carry on in India and abroad, the business of developing, designing, planning, executing, consultancy services or otherwise deal in, operate, provide and facilitate in any manner the entire range of informationtechnology enabled services, websites, mobile websites, web-enabled services, value-added services, establishment and operation of customer call centres, customer service centres, technical support centres, billing, payment processing, claims processing and document processing in support of and in furtherance of the above objects
BUSINESS STRATEGY of AWFIS Space Solutions:
- Continue to build an industry leading capital efficient model
- Expand in new and existing markets
- Enhance our product and service offerings
- Improving operational efficiency
Overview of AWFIS Space Solutions:
- Largest flexible workspace solutions company in India as on December 31, 2023, based on total number of centers.
- are ranked 1st among the top 5 benchmarked players in the flexible workspace segment with presence in 16 cities in India.
- have 169 total centers1 across 16 total cities1 in India, with 105,258 total seats1 and total chargeable area1 of 5.33 million sq. ft
BUSINESS MODEL of AWFIS Space Solutions:
Two differentiated models for sourcing and procuring workspace:
- SL model: Under the SL model, developers or space owners lease space to flexible workspace operators on traditional leases wherein typical market terms and conditions are applicable, including a fixed monthly rental, common area maintenance charges, security deposit, minimum lock-in period, lease tenure and escalations.
- MA model: The MA model is more collaborative in nature, wherein our space owners become a stakeholder in the center by co-investing in the fit-out infrastructure.
Segment Information of AWFIS Space Solutions
| Particulars | Segment Information | |||||||
| Fiscal 2021 | Fiscal 2022 | Fiscal 2023 | Nine months ended December 31, 2023 | |||||
| (₹ in million) | (% of revenue from contract with customers) | (₹ in million) | (% of revenue from contract with customers) | (₹ in million) | (% of revenue from contract with customers) | (₹ in million) | (% of revenue from contract with customers) | |
| Co-working space on rent and allied services | 1,619.84 | 90.82% | 1,963.38 | 76.38% | 4,188.49 | 76.81% | 4,511.10 | 73.17% |
| Construction and fit-out projects | 114.86 | 6.44% | 487.30 | 18.96% | 1,050.18 | 19.26% | 1,472.94 | 23.89% |
| Others | 48.90 | 2.74% | 119.77 | 4.66% | 214.15 | 3.93% | 180.95 | 2.94% |
| Revenue from contract with customers | 1,783.60 | 100.00% | 2,570.45 | 100.00% | 5,452.82 | 100.00% | 6,164.99 | 100% |
Client concentration of AWFIS Space Solutions:
| Client | Fiscal | Nine months ended December 31, | ||
| 2021 | 2022 | 2023 | 2023 | |
| Top client | 9.23% | 6.64% | 2.97% | 4.63% |
| Top 5 clients | 26.67% | 18.33% | 12.67% | 13.15% |
Supply Network and Process of AWFIS Space Solutions
| Particulars | As at March 31, 2021 | As at March 31, 2022 | As at March 31, 2023 | As at December 31, 2023 |
| Operational | ||||
| Operational Cities | 11 | 13 | 16 | 16 |
| Operational Chargeable Area (in million sq. ft.) | 1.46 | 2.21 | 3.50 | 4.10 |
| Operational Centers | 58 | 84 | 119 | 138 |
| Operational Seats | 30,253 | 46,152 | 68,203 | 79,946 |
| Occupied Seats | 17,946 | 29,099 | 51,140 | 60,038 |
| Occupancy Percentage | 59.32% | 63.05% | 74.98% | 75.10% |
Between March 31, 2021 and March 31, 2023, our operational centers, operational seats and chargeable area grew at a CAGR of 43.24%, 50.15% and 54.83%, respectively.
Employees information of AWFIS Space Solutions
| Function | Number of employees |
| Awfis Space (comprising the Space Solutions and Allied Services, and Awfis Transform segments) | |
| Real Estate and Leasing | 10 |
| Design and Projects | 63 |
| Operations | 184 |
| Sales | 54 |
| Information Technology | 19 |
| Management | 7 |
| Support | 97 |
| Total (Awfis Space (comprising the Space Solutions and Allied Services, and Awfis Transform segments)) | 434 |
| Awfis Care | |
| Housekeeping | 2,246 |
| Technical | 306 |
| Backend support | 67 |
| Total (Awfis Care) | 2,619 |
| Grand Total | 3,053 |
Strength:
Believe that our leadership position in the flexible workspace ecosystem, is due to our strengths that not only set us apart but also enable us to benefit and capture the growth in India’s rapidly evolving flexible workspace landscape
Key financial ratios of AWFIS Space Solutions:
| Parameter | As at and for the Fiscal 2021 | As at and for the Fiscal 2022 | Y-o-Y growth (Fiscal 2021 v. Fiscal 2022) | As at and for the Fiscal 2023 | Y-o-Y growth (Fiscal 2022 v. Fiscal 2023) | As at and for the nine months ended December 31, 2023 |
| (in ₹ million, unless otherwise stated) | ||||||
| Restated loss for the period / year | (426.42) | (571.56) | 34.04% | (466.37) | (18.40)% | (189.42) |
| Restated loss for the period/years (as percentage of total income) | (19.74)% | (20.51)% | 3.89% | (8.24)% | (59.80)% | (2.99)% |
| EBITDA | 907.49 | 899.96 | (0.83)% | 1,760.63 | 95.63% | 1,954.99 |
| EBIT | 39.13 | (84.37) | (315.64)% | 260.84 | 409.15% | 502.16 |
| Cash EBIT | 71.16 | 14.22 | (80.02)% | 361.54 | 2,442.85% | 669.80 |
| Cash EBIT Margin | 3.99% | 0.55% | (86.13)% | 6.63% | 1,098.70% | 10.86% |
| RoCE | 10.88% | 1.75% | (83.92)% | 25.26% | 1,344.34% | 49.91%* |
| Net debt | (853.23) | (134.19) | (84.27)% | (262.26) | 95.44% | (682.56) |
| Debt to equity ratio (in times) | 0.02 | 0.13 | 549.44% | 0.06 | (49.54)% | 0.10 |
| Net debt to equity ratio (in times) | (0.57) | (0.14) | (74.97)% | (0.15) | 9.30% | (0.28) |
| Occupied seats (as of exit month) | 17,946 | 29,099 | 62.15% | 51,140 | 75.74% | 60,038 |
| Occupancy percentage (as of exit month) | 59.32% | 63.05% | 6.29% | 74.98% | 18.92% | 75.10% |
AWFIS Space Solutions’s Subsidiary Companies
- Company has one Subsidiary, Awliv Living Solutions Private Limited
- Awliv Living Solutions Private Limited was incorporated as a private limited company on June 7, 2016
- Nature of business
- Awliv Living Solutions Private Limited is authorised under its memorandum of association inter alia to engage in the business of providing all type of living space solutions to customers / clients including shared living accommodations, space for parking lots, home solutions, etc. and to act as an internet service provider and to provide related services including satellite and broad band based communication services and to develop consumer oriented electronic commerce and all other similar and/or allied services.
CAPITALISATION STATEMENT of AWFIS Space Solutions
| Particulars | Pre-Offer as at December 31, 2023 |
| Borrowings | |
| Non-current borrowings | 175.03 |
| Current borrowings | 62.17 |
| Total borrowings | 237.20 |
| Equity | |
| Equity share capital | 191.52 |
| Other equity | 2,280.33 |
| Total equity | 2,471.85 |
| Non-current borrowings / total equity (times) | 0.07 |
| Total borrowings / total equity (times) | 0.10 |
FINANCIAL INDEBTEDNESS of AWFIS Space Solutions
| Category of borrowings | Sanctioned Amount* | Outstanding amount as on April 30, 2024 |
| Secured | ||
| Term Loan | 650.00 | 314.04 |
| Working capital facilities (Overdraft/WCDL/WCTL) | 400.00 | Nil |
| Vehicle Loan | 5.12 | 4.62 |
| Total | 1,055.12 | 318.65 |
Shareholding of AWFIS Space Solutions
| Promotors | 41.53% |
| Public | 58.47% |
Shareholding of Directors in Company
| Name | No. of Equity Shares | Percentage of the pre- Offer paid up share capital on a fully diluted basis (%) |
| Amit Ramani | 12,163,084 | 18.19% |
| Arjun Bhartia | 1,047,555 | 1.57% |
Awfis Space Solutions IPO Details (as of May 18, 2024)
IPO Status: The IPO is open between May 22nd and May 27th, 2024.
Issue Details:
- Issue Size: ₹598.93 Crore
- Price Band: ₹364 – ₹383 per share
- Type: Main Board IPO
- Listing: BSE & NSE (expected listing date May 30th, 2024)
Other Important Dates:
- Allotment Finalization: May 28th, 2024 (expected)
- Refund & Demat Credit: May 29th, 2024 (expected)
Risks and Considerations of AWFIS Space Solutions:
Please refer page numbers of RHP 396-404
Important: Clearly state this is not financial advice and readers should do their own research before investing.
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