Shares of Smartworks Coworking Spaces moved up more than 4% in early trade after Kotak Institutional Equities initiated coverage on the stock with a Buy rating and a target price of ₹600 per share. The brokerage’s positive stance is anchored in Smartworks’ leadership position in India’s rapidly expanding flexible workspace market and its strong medium-term earnings growth visibility.
Kotak highlighted that Smartworks is currently the largest flexible workspace operator in India’s mid-priced segment. As of FY2025, the company operates across 9.1 million square feet, with an average realisation of about ₹7,300 per seat. According to the brokerage, this mid-market positioning offers a strategic advantage, striking a balance between affordability for corporate occupiers and operating leverage for the platform.
The brokerage note also pointed to a broader structural shift underway in India’s commercial real estate landscape. Flexible workspaces now account for nearly one-third of incremental office leasing, as enterprises increasingly move towards managed and flexible office solutions. This shift is being driven by the need for better capital efficiency, greater workforce agility and reduced long-term lease commitments. Kotak believes these trends should continue to support demand for players like Smartworks, even if near-term office absorption remains uneven.
From a financial perspective, Kotak estimates that Smartworks’ EBITDA will grow at a 38% CAGR over FY2025–28E. This growth is expected to be supported by an expansion in operational area to 14.5 million square feet, along with margin improvement of around 380 basis points. As new centres mature and occupancy levels stabilise, operating leverage is likely to improve, aided by cost efficiencies across the platform.
Kotak, however, flagged certain risks to its outlook. A slowdown in overall office leasing activity or a slower-than-expected adoption of flexible workspaces by large corporates could impact growth momentum. Despite these concerns, the brokerage remains confident that Smartworks’ scale, execution capabilities and focused presence in the mid-priced segment provide it with a competitive edge as the industry moves towards consolidation.
