Stocks To Buy: Office space provider is a 'consensus buy' among analysts who track it

Shares of Smartworks Coworking Spaces Ltd. could rise as much as 19% from current levels, according to brokerage firm Kotak Institutional Equities, which initiated coverage on the stock on Friday, January 2.

Kotak has initiated coverage on Smartworks with a 'Buy' rating and a price target of ₹600 per share.

The brokerage said Smartworks, the Haryana-based managed office and flexible workspace provider, is India's leading flexible workspace operator in the mid-priced segment, with an operational footprint of 9.1 million square feet and an average pricing of ₹7,300 per seat in FY25.

Kotak expects Smartworks' EBITDA to grow at a 38% CAGR over FY25-28E, backed by an expansion in operational area to 14.5 million square feet and margin improvement of 380 basis points.

According to Kotak, flexible workspaces continue to witness strong traction within commercial real estate, accounting for nearly one-third of incremental leasing activity in the sector.

However, moderation in overall office absorption and slower adoption of flexible workspaces remain key risks to the outlook.

In an interaction with CNBC-TV18, Smartworks founder and CEO Neetish Sarda said the company is looking to redefine India's flexible workspace market with its upcoming Eastbridge campus in Vikhroli. The 8.1 lakh square foot facility is expected to be the world's largest managed office campus.

The project, which is likely to be operational by mid-to-end 2026, will have the capacity to house over 10,000 professionals and reflects Smartworks' shift towards large, self-contained office ecosystems catering to enterprise and GCC clients.

Smartworks typically breaks even at occupancy levels of around 60-65%, which are achieved within 8-10 months, while mature centres operate at over 90% occupancy.

All five analysts tracking Smartworks have a 'Buy' rating on the stock.

Shares of Smartworks Coworking Spaces closed 2.18% higher on Thursday at ₹505.55. The stock is up about 24% from its IPO issue price of ₹407.