Kotak Institutional Equities has initiated coverage on Smartworks with a buy rating and a target price of ₹600 per share, citing its leadership position in India’s fast-growing flexible workspace segment and strong earnings growth visibility over the medium term.
Kotak highlighted that Smartworks is India’s largest flexible workspace operator in the mid-priced segment, with an operational footprint of 9.1 million square feet and an average realisation of ₹7,300 per seat in FY2025. The brokerage noted that the company’s positioning in the mid-market segment offers a favourable balance between affordability for occupiers and operating leverage for the platform.
According to Kotak, Smartworks is well placed to benefit from the structural shift underway in India’s commercial real estate market, where flexible workspaces now account for nearly one-third of incremental leasing activity. Enterprises are increasingly adopting managed and flexible office solutions to improve capital efficiency, enhance workforce agility and reduce long-term lease commitments, trends that continue to support demand despite near-term fluctuations in office absorption.
Kotak estimates that Smartworks’ EBITDA will grow at a 38% CAGR over FY2025–28E, driven by a combination of expansion in operational area to 14.5 million square feet and margin expansion of around 380 basis points. The brokerage expects operating leverage to improve as new centres mature, occupancy stabilises and cost efficiencies kick in across the platform.
However, Kotak cautioned that risks remain. A moderation in overall office absorption, along with a slower-than-expected pace of adoption of flexible workspaces by corporates, could temper growth. That said, the brokerage believes Smartworks’ scale, execution track record and focus on the mid-priced segment provide a competitive advantage as the industry consolidates.
Overall, Kotak sees Smartworks as a direct beneficiary of the long-term evolution in India’s office leasing landscape, with strong earnings growth potential underpinning its positive stance.
Disclaimer: The views and recommendations above are those of Kotak Institutional Equities. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
