NSE: AWFIS
Market Cap: ₹3.5k Cr.
Company Profile
AWFIS Space Solutions Ltd, also known as ASSL is a co-working space company. It was started in 2014 and is currently available in more than 16 cities in India with 169 centers. Including metro cities like Delhi, Mumbai, Bangalore and more.
They provide working spaces from individual desks to customized office spaces for start-ups, SMEs, large corporations, and MNCs. The company was listed on may 2024.
Business Model (A Major Shift)
In a report by a major rating agency, it was noted that Awfis has made a significant change to its business model.
Previously, they operated on leases, bearing all the costs themselves. Now they have shifted to a Management Agreement (MA Model) for about 66% of their seats, allowing them to partner with property owners and share some costs in exchange for profit sharing.
Benefits: This new model of Awfis is an asset-light model, which allows them to free up a lot of working capital. moreover, The return on capital employed (ROCE) has also increased significantly.
Competitors in the market
Awfis currently doesn’t have any competitors in the listed space. However, offline, they do have some big players. WeWork is one of the biggest players in the market. ABL Workspaces and IndiQube are also direct competitors. Moreover, specific competitive advantages or moats weren’t found in Awfis’ business model.
How is the management of Awfis?
Amit Ramani is the Managing Director and Chairman, with over 20 years of experience in Real Estate & Workplace Solutions. In addition to this, Sumit Lakhani is the Deputy CEO with 17 years of experience in marketing, sustainable investment banking, and engineering. Moreover, Ravi Dugar is the CFO, with 20 years of finance experience. Manu Dhir is the COO, with 25 years of experience in hospitality, restaurants, and beverages.
Financial Performance of the Company
The sales growth in the company has been significant in the past few years. However, the net profit is negative as the company is focused on growth. The company is making huge expenses on marketing and employees.
Since the net profit is negative, the Return on share holder’s equity is also negative, however, due to the model shift the Return on Capital is seen with growth. Moreover, there is a huge debt on the company of ₹734 Cr. which plays one of the key roles in the negative net profit. Generally, small-cap companies with debt are not s good choice but the exceptional growth and presence of Awfis cushions the worry of shareholders.
Revenue Mix
Currently, the company is making most of its revenue from co-working spaces, with the remainder coming from construction and fit-out projects. .
Financial Forecast
Since it is a new company, it is expected that it will continue its growth phase. However, the net profit is still projected negative as the debt amount is significant.
What is the Future of Co-Working Industry?
The market size of co-working spaces in India is expected to double by 2030, as reported by business-standard.com. It’s evident that there is a startup boom in India, and startups prefer co-working spaces due to their flexibility and cost-saving benefits.
The real estate consultancy firm Anarock stated that 54% of Indian companies are choosing these co-working spaces. The top 5 cities in which Awfis operates, namely Mumbai, Delhi, Gurugram, Noida, and Bengaluru, were reported to have the highest demand for co-working spaces.
Disclaimer
The information presented here is for educational purposes only and should not be considered financial advice. Please do your own research before making any investment decisions.
