concall notes:
They have presence in 7 cities having 35 centers
They offer end to end solutions
Whiteless interiors and dnb vertical offer interior designs and commercial space furnishing solutions
Backed by strong supply chain
Total asset under management was 1.9million sqt
The total seating capacity 40k
Avg per seat rental =6250rs
The BND VERTICAL CLOSED a single largest contract with coforge for developing 1lakh sq feet of commericial space in fy23-24
By march 2026 want to take seats to 92k
India ranks 2nd largest coworking market in the world
Estimiated 60million sq ft of flexible office stalk available
In 2023 office coworking space had 20% of the total office space
Strategically diversified into intetrior fit out and furniture manufacturing biz
This will not only broaden their operations but integrate their operations
Their interior fit out division give customised designs and solutionns to client
Nd their furniture manufacturering gives modern space office furniture
Manufacturing will be commissioned 2025
Their interior fitting is already seeing an upward trend
They have already become a preferred vendor to many large organisations
Tcs,coforge and many more
Rental 268ct
BND 113cr
Furniture -46cr
Rev split
They’re thinkng of going in reits and aifs by being a sponsor and brining in more unit holders
Why?
See in leasing not being the operator is fine
But in process of asset creation wee think this is a win win situation
As in todays reits the max yeilds you get se 5-6% but in this case with the epertise they have they
Will choose a property which can be leased out so all this will lead to much better yields for unit holders as well
And since efc will be managing these offices they will charge a feee ehich will directly flow to bottom line
They have made a subsidiary
Efc estate private limited
They would like this spv to take part in some of the investments theyre going to make
They see/get alot of opportunities wheather it is development of IT park or development of large commercial a grade property so as part of their biz they need to block such properties for their biz gng fwd so taking those strategic decisions
Theyre doing this so those assets come under their management fully furnished which helps them
Efc estate will look for making such strategic investments in commercial spaces ,it parks where they feel there is an upside as its own from a investment point of view and also another upside in the form of securing those reits form managing those reits either through getting the leased reits or otherwise
How will they fund this ?
As reits case they will use another holders funds
(At present going through internal accrual )
Furniture 40%
Rental -30(central level )avg comes out to about 23-24% if you account for the occupancy gap)
Design and build divison: negative wc biz so margins here 16-17%
(Ebita margins )
Blended pat margins 15-20%
Furniture production will start in Q2 fy25
Plant is almost ready etc etc
Will go live by q2
Efc india rental biz which is the managed office biz is always the anchor clinet for this units
Should achieve 150-200cr from this infy25
They work like a family
Bnd
Furniture
Fitting
Here working capital cycle is 90-120days
They try to do it 60days also but generally it takes 90-120days
And in large contracts when the work with tcs,coforge and all you have some rentention money involved bcz they also want to ensure that once you finshed ur work ur quality ,testing and their own internal control ,handover of the property and etc they would still like to retain a certain amount of money that way wc blockagege more
In managed office biz expect the monly gap you have of 30days otherwise it is pretty much on time
And on a avg there is no bad debt or delay situations
65k plus in fy25
By sept 50-55k seats
And these are all already contracted meaning under development or beginning to development
So by sept 50-55k seats
Here their clients are like
Quesscorp,flipkart,tech mahindra,mahindra finance,meta ,bajaj finance etc
In managed offices they typically focucses on established biz offices or players who can commit you a certain period of lock in to you ,so they derive certaintiy for their biz as well
Tcs ,coforge clinets are in BND
In BND they also devleop R&D centers,research labs,health care centers and these are some spaces where they make higher margins then normal office spaces bcz there are standard products in offices
In offices 13-15% on a net level
But in others it increasees to 5-6%
15-16%blended
Will Spread acorss in major 9cities the expansion to 92kseats
75% growth in seats atleast for coming years in total number of seats
Minium lock in period with top clients is 3-5years
Some of the top special clients with whom they have been with 6+years bcz wee have been in here from 10years so they join for 5year contract
Tam
65million sqft for leasing (coworking)
They’re among top 5,top -10
In terms of profits theyre in top 3-5
Flex office industry is growing 20%+कॅcagr
Will like to beat these numbers
Q4 they were around 88-90%occpany the same range for the full year
generally always theyre at 90% utilisation
As 75-80% of the rev is contributed from the longterm clients
Capex cost per seat 50k
Their cost is lower then others bcz
They have a large huge purchasing capacity
And doing this for 10years
Developing their own centers without use of any external parties ,contractors or etc
So what has happend that in the process now they can do things by their own be it setting up interet connectivity etc etc that is enabling them to lower the cost and maintian the efficiency
And why they have gone into bnd and furniture divison
In Maharashtra their leases are for 5years not more then that bcz in Maharashtra above 5years there is a heafty stamp duty
And they have been always been able to extend tgis by another 5years
Otherwise avg contract range between 8-9years
With their large customers they have contract for 5 years and lockin of 3-5years depending in the comfort they have with the client
(For ALM)
5differnt parameters in seats
Seats under development :means the capacity which are already contracted and where eager the seats are under development ir seats are being made as of now or interior is yet to be done
Capacity operational is the capacity which is fully ready and operational so those centers are operational
And billed seats are those which they’re billingto the customers
Seats under development means the difference between capacity opertional and capacity under development
So the development capacity will come live in one month or so
Inventory is the difference between the operational capacity and the billed seats
Rev from the managed office as a percentage will go down
Beyond a point there is a limitation here
Ideally they would like to achive mix of all the verticalls equally
BND there is a infinite growth available
Bnd -132cr order book from tcs ,coforge etc
And thereabout 60crs are in advance talks as they speak
This 132 will be translted in revs in Q1 or Q2
Top 10clients in the coworking space will capture 50%
By the time their furnishing work finishes they aim to capture 80%occupany
The development gestation period is 3-6months
From the time the center is ready to occupy
What kind of customer do they target?
They
The quality of infrastructure they provide they attract both international and domestic clients
The only uniqueness is how you minimise ur costs and increase ur efficiency
They’re making a sqft @1250rs
They dont have virtual offce as of now
Theyre are some legal issues in this
Will look at this in the future not now
Looking for b2c and b2b both for furniture
60-80%utlisation is possible in the first year itself
50k per seat cost
30k goes for furniture(all furniture )
For aif 2% is fractional required
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