Smartworks Coworking Spaces Secures CARE A- (Stable) Rating Reaffirmation
CARE Ratings has reaffirmed Smartworks Coworking Spaces Limited's (SCSL) credit ratings, maintaining CARE A- (Stable) for long-term and CARE A1 for short-term bank facilities. The company showed improved operations with total operating income increasing by 31.99% to ₹1,375.27 crore in FY2025. SCSL's successful IPO in July 2025 strengthened its financial profile, reducing adjusted overall gearing to 0.5x. The company maintains an 83% occupancy rate and operates across multiple cities with a diverse client base.
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CARE Ratings Limited has reaffirmed the credit ratings for Smartworks Coworking Spaces Limited (SCSL), maintaining its CARE A- (Stable) rating for long-term bank facilities and CARE A1 for short-term bank facilities. This reaffirmation follows an earlier upgrade on November 6, 2025, reflecting the company's continued operational improvements and strengthened financial profile.
Key Highlights
- Rating Reaffirmation: CARE A- (Stable) for long-term and CARE A1 for short-term bank facilities
- Improved Operations: Continued enhancement in scale and efficiency
- Successful IPO: Listed on stock exchanges from July 17, 2025
- Strengthened Financials: Enhanced capital structure and improved debt coverage indicators
Financial Performance
Smartworks Coworking Spaces has demonstrated robust growth and financial stability, as evidenced by its recent financial data:
| Metric | FY2025 | FY2024 | YoY Change |
|---|---|---|---|
| Total Operating Income | ₹1,375.27 crore | ₹1,041.91 crore | 31.99% |
| EBITDA | ₹892.90 crore | ₹733.40 crore | 21.75% |
| Net Profit | ₹-63.20 crore | ₹-50.00 crore | 26.40% |
Despite the negative net profit, which is largely attributed to accounting policies related to non-cancellable and renewable lease tenures under IND-AS, the company has shown significant improvement in its operating income and EBITDA.
Operational Strengths
- Pan-India Presence: SCSL operates across multiple cities, reducing geographical concentration risk.
- Diverse Client Base: The top 20 tenants contribute only 28% of total rental income, minimizing business risk.
- Long-term Contracts: Average total tenure with customers is 4 years, providing revenue visibility.
- High Occupancy: 83% occupancy rate as of March 31, 2025, up from 80% in the previous year.
Capital Structure and Liquidity
The successful IPO in July 2025 has significantly improved SCSL's capital structure. As of September 30, 2025, the adjusted overall gearing without considering lease liabilities improved to below unity, standing at 0.5x. This represents a substantial improvement from the previous year's figure of 19.56x.
Future Outlook
While SCSL has shown impressive growth and operational improvements, investors should note:
- The company continues to report accounting losses, primarily due to IND-AS accounting policies.
- Expansion plans in the pipeline may pose market risks, although the modular nature of capex provides some flexibility.
- The company remains exposed to macroeconomic factors and the cyclical nature of the real estate industry.
The stable outlook assigned by CARE Ratings suggests an expected continuation of improvement in the company's financial performance in the near-to-medium term, driven by healthy growth of space under management and comfortable occupancy levels.
Investors and stakeholders should monitor SCSL's ability to maintain its growth trajectory, manage expansion risks, and navigate the competitive coworking space market as key factors in its future performance.
