What is driving the demand for flex spaces?
Source: CBRE, JLL, Nuvama Wealth Research
I. Sharp growth in start-ups, grown at a CAGR of 68% since 2019
II. Influx of GCCs to capitalize on the strong talent pool, favorable demographics; to grow at 9.7%
CAGR over 2023-25
III. A win-win-win proposal for owner-operator-tenant
Investment Rationale
I. Favorable market dynamics, flex seat demand to grow at 23.3% CAGR over 2023-26E
II. Strong expansion plan to capitalize on demand, to add ~108,000 seats (28.8% CAGR) over FY24-27E
III. See blended revenue expanding at 40.1% CAGR over FY24-27E to INR 2,336cr, led by
I. A 37.8% revenue CAGR in rental and allied services over FY24-27E on expansion and healthy rental
rates
II. A 50% revenue CAGR in Design & Build on market share gains
IV. EBITDA (ex-IndAS 116) to grow at 68.6% CAGR over FY24-27 to INR 340cr, margin to reach 14.6%
V. Expect a 92.3% PAT CAGR (ex-IndAS 116) over FY24-27E; margin to climb to 11.6%
VI. A shift towards capital efficient, low-risk managed aggregation supply model
VII. RoE to expand to 32.6% in FY27 from 15.1% in FY24 on improving margin and asset light expansion
