Smartworks IPO gets fully subscribed on Day 2: Should you apply?

Smartworks IPO Day 2

The Rs 583-crore IPO of Smartworks Coworking Spaces got fully subscribed  on its second day of public bidding (July 11). The maiden public issue of the company saw the strongest interest from non institutional investors.

The IPO has received bids for nearly 1.2 crore shares, as against the offer size of 1.04 crore shares, according to data on NSE. While Non Institutional Investors (NII) booked their reserved portion nearly 1.79 times, retail investors subscribed the portion kept them 1.19 times. Qualified Institutional Buyers (QIBs) booked their reserved portion 63 percent.

Smartworks Coworking Spaces GMP:

The grey market premium (GMP) for the IPO dropped slightly today, on its second day of public bidding. Ahead of listing, the unlisted shares of the company were trading with a GMP of over 6 percent at Rs 432 apiece, as per data on Investorgain at the time of writing. The site had earlier quoted a GMP of nearly 8 percent a day before the IPO opened for subscription.

IPO Watch however quoted the GMP at nearly 8 percent.

Key things to know about Smartworks Coworking Spaces IPO:

Smartworks Coworking Spaces had launched its IPO to raise nearly Rs 583 crore at a price band of Rs 387-407 per share. The issue will remain open for public bidding from July 10 to July 14, and the shares of the company will likely be listed on stock markets on July 17.

The public issue comprises a fresh issuance of shares worth Rs 445 crore, and an offer-for-sale of 33.79 lakh shares worth Rs 137.56 crore by the existing shareholders. Investors can apply for a minimum of 36 shares, requiring an investment of Rs 14,652, and in multiples thereafter.

Should you subscribe?

Anand Rathi and Deven Choksey have given 'Subscribe' ratings to the IPO, stating that it is attractively priced. Geojit Financial Services also recommended a 'Subscribe' rating for the IPO on a long-term basis. "Given its asset-light business model, capital efficiency through variable rental and management contracts, and the scale up of new revenue streams (like value-added services & fit–out as a service), which are margin accretive, further strengthen the business going forward," it said.

Gaurav Garg, Lemonn Markets Desk, noted "While Smartworks demonstrates impressive revenue growth, scale, and operational efficiency, the company is currently in its growth phase and yet to achieve profitability."

"Its fixed-lease model and high client concentration present certain risks in the near term. Given the competitive landscape and the presence of already-profitable listed peers like Awfis, we believe it may be prudent to adopt a wait-and-watch approach. Investors can consider tracking the company’s post-listing performance and path to profitability as potential indicators for future investment opportunities," he added.

Anchor Book:

A day before the IPO opened for public bidding, Smartworks Coworking Spaces raised Rs 173.6 crore from 12 institutional investors via anchor book on July 9. The company in its BSE filing on Wednesday said it has finalised allocation of 42.66 lakh shares to anchor investors at a price of Rs 407 per share.

Tata Mutual Fund, Axis New Opportunities AIF, Aditya Birla Sun Life Insurance Company, Baroda BNP Paribas Mutual Fund, Sageone, SBI General Insurance Company, Trust Mutual Fund, BNP Paribas, and Societe Generale are among 12 institutional investors participated in the anchor book.

Smartworks is an office experience and managed Campus platform, having a total SBA of 8.99 million square feet across 50 centres in 15 cities.

The company will repay its debt amounted to Rs 114 crore through fresh issue proceeds. Further, Rs 225.8 crore out of fresh issue proceeds will be used for fit-outs in the new centres and for security deposits of the new centres, and the remainder funds for general corporate purposes.

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