Smartworks Coworking Spaces delivered its strongest quarterly performance in Q3 FY26, with management describing the results as confirmation that India's largest managed office platform has entered a "compounding phase." The Gurugram-based company achieved significant milestones across key financial and operational metrics during the quarter.

Financial Performance Highlights

The company's financial performance showed robust growth across all major parameters during Q3 FY26:

The company achieved profitability under Ind AS while maintaining its net-debt negative position, demonstrating strong cash generation capabilities. The operating cash flow of ₹101.00 crore surpassing EBITDA reflects the business model's cash conversion efficiency.

Operational Scale and Growth

Smartworks has established a significant operational footprint across India's major commercial markets:

During the quarter, the company added 1.7 million square feet through letters of intent, indicating continued expansion momentum. The mature centres maintained strong performance with 93% committed occupancy rates.

Revenue Mix and Client Strategy

The company's revenue composition reflects a strategic focus on enterprise clients and large-format deals. Enterprise clients driving multi-city contracts now account for approximately 30% of rental revenue, while large-format deals with over 1,000 seats contribute 35% of rental revenue. This shift towards longer-tenure contracts provides greater revenue stability and predictability.

Committed rental revenue exceeded ₹4,700.00 crore, offering substantial forward visibility for the business. This metric underscores the company's success in securing long-term commitments from enterprise clients across multiple locations.

Management Outlook

Founder Neetish Sarda highlighted that the quarter's results confirmed the business had entered a compounding phase, with growth anchored in long-tenure enterprise contracts. The company plans to sustain its expansion through a self-funded model backed by positive cash generation, reducing dependence on external financing.

The strong operational and financial metrics position Smartworks to capitalize on India's growing demand for flexible workspace solutions while maintaining its market leadership in the managed office segment.

Smartworks Coworking Spaces Limited has filed its quarterly monitoring agency report for the quarter ended December 31, 2025, under Regulation 32 of SEBI's Listing Obligations and Disclosure Requirements Regulations, 2015. The report, prepared by CARE Ratings Limited, provides a comprehensive overview of the company's IPO fund utilization progress.

IPO Fund Utilization Overview

The coworking space provider utilized ₹34.46 crores during Q3 FY26 from its initial public offering proceeds of ₹445.00 crores. This brings the total cumulative utilization to ₹272.30 crores, leaving ₹172.70 crores unutilized as of December 31, 2025.

Object-wise Fund Deployment

The company's IPO proceeds were allocated across four primary objectives, with varying levels of completion:

Debt Repayment (Completed): The company successfully completed the repayment of certain outstanding borrowings worth ₹114.00 crores during Q2 FY26, fully achieving this objective.

Capital Expenditure for New Centers: For fit-outs and security deposits of new centers, the company spent ₹23.25 crores during Q3 FY26, bringing total utilization to ₹64.50 crores against the allocated ₹225.84 crores. The remaining ₹161.34 crores will support ongoing expansion activities.

Deployment of Unutilized Funds

The company has invested its unutilized proceeds in fixed deposits across multiple banks to earn returns while maintaining liquidity. The deployment includes:

• Bank Accounts: ₹14.56 crores in HDFC Bank public issue and monitoring accounts
• Fixed Deposits: ₹163.80 crores across HDFC Bank, Kotak Mahindra Bank, AU Small Finance Bank, and Jana Small Finance Bank
• Interest Rates: Ranging from 2.75% to 7.00% with varying maturity dates

The fixed deposits are strategically distributed with maturity dates spanning from January 2026 to September 2026, ensuring regular liquidity for operational requirements.

Regulatory Compliance and Monitoring

CARE Ratings Limited confirmed that the utilization of proceeds during Q3 FY26 aligns with disclosures in the offer document. The monitoring agency reported no deviations from the stated objectives and confirmed that shareholder approvals were not required as there were no material deviations.

The report noted that while the company has incurred net losses for the past five financial years, it has maintained cash profits during those periods. This information was highlighted as relevant for investor decision-making.

Implementation Timeline

The company remains on track with its implementation timeline:

• Debt repayment completed within Fiscal 2026 as planned
• Capital expenditure for new centers progressing toward Fiscal 2027 target
• General corporate purposes utilization ongoing within Fiscal 2026
• No delays reported in any of the stated objectives

The monitoring agency report demonstrates Smartworks' systematic approach to deploying its IPO proceeds while maintaining transparency and regulatory compliance in its expansion activities.