Unlisted shares of Awfis Space Solutions Ltd are trading Rs 113 higher in the grey market, expecting a 29.5 per cent listing gain from the public issue
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Awfis Space Solutions IPO: The initial public offering of flexible workspace solutions company Awfis Space Solutions Ltd, which is going to be closed on Monday, has received a decent response from investors. Till 10:43 pm on the final day of bidding on Monday, the Rs 599-crore IPO received 17.91 times subscription, garnering bids for 15,45,76,110 shares as against 86,29,670 shares on offer.
Retail investors oversubscribed the category by 26.49 times, while non-institutional investors showed interest at 39.28 times. In the QIB category, 4.43 times subscription has been received.
The Awfis Space Solutions IPO, which was opened for public subscription on May 22, comprises fresh issuance of equity shares worth Rs 128 crore and an offer-for-sale (OFS) of 1.23 crore equity shares.
Awfis Space Solutions IPO: Subscription Dates, Allotment Date, Listing Date
The Awfis Space Solutions IPO will remain open between May 22 and May 27. Its allotment will likely be finalised on May 28, while its listing will take place on both BSE and NSE on May 30.
Awfis Space Solutions IPO Price and Lot Size
The price of the Awfis Space Solutions IPO has been fixed at a price band of Rs 364-383 per share.
Investors need to apply for a minimum of 39 equity shares and in multiples thereof. Hence, the minimum investment by retail investors would be Rs 14,937 [39 (lot size) x Rs 383 (upper price band)].
Awfis Space Solutions IPO: Category-Wise Quota
The issue has been reserved up to 75 per cent for qualified institutional buyers (QIBs), 15 per cent for non-institutional buyers, and 10 per cent for retail investors.
Awfis Space Solutions IPO GMP Today
According to market observers, unlisted shares of Awfis Space Solutions Ltd are trading Rs 113 higher in the grey market as compared with its issue price. The Rs 113 grey market premium or GMP means the grey market is expecting a 29.5 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Awfis Space Solutions IPO: Should You Subscribe?
Giving a ‘subscribe for long term‘ recommendation for the issue, brokerage Anand Rathi its IPO note said, “The company has a large Total Addressable Market (TAM) driven by factors such as enterprise focus on flexibility, cost optimisation, workforce fluidity, reverse migration, workplace evolution, focus on wellness, facilities, and amenities, as well as growth of start-ups in Tier 1 and Tier 2 cities. Looking at these factors we recommend ‘Subscribe – Long Term’ rating to the IPO.”
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The company has a Price to Sales ratio of 4.9x of its FY23 earnings. The
company has shifted to an asset light model which will show benefits in
the coming time period, it added.
Another brokerage Mastertrust also gave ‘Invest‘ rating to the IPO. “The Indian office market is expected to grow at a CAGR of 6.3% from 2023 to 2026. India’s commercial Tier 1 office stock stands at 832 million sq. ft. as of December 31, 2023. Awfis Solutions plans on continuing to build an industry leading capital efficient model in order to keep hold of the market share and increase the percentage of operational centres and seats under the MA model.”
The company also intends to expand in new and existing markets by evaluating potential locations and cities based on multiple criteria. But, the company has incurred losses in the past financial years. “Investors looking to invest can invest for listing gains”, Mastertrust said.
Giving a ‘neutral‘ stance on the Awfis IPO, brokerage firm Swastika in its note said, “While the company exhibits promising top-line growth, achieving profitability remains a key challenge. Awfis has experienced negative cash flow in the past and operates in a highly competitive environment susceptible to macroeconomic fluctuations.”
Given the negative EPS, a P/E ratio cannot be calculated. Considering the potential for future growth balanced against the current financial situation and competitive landscape, “we recommend a neutral stance on the Awfis IPO”. Investors should conduct thorough due diligence and closely monitor the company’s progress before making a final decision, Swastika said.
Awfis Space Solutions IPO: Risks
1) Awfis Space Solutions has a history of net losses, negative earnings per share (EPS) and return on net worth.
2) The company has experienced negative cash flows in previous fiscals and may continue to have negative cash flows in the future, says Mastertrust.
3) The company has entered into long-term fixed cost leases, i.e., SL for 1.94 million sq. ft. covering 62 total centers across 11 total cities and 9 states and 33.57% of total seats as of December 31, 2023, which may result in adverse impact in liquidity, results of operations, cash flows and profitability.
Awfis Space Solutions IPO: More Details
Awfis Space Solutions’ proposed initial public offering (IPO) is a combination of fresh issue shares to the tune of Rs 128 crore and an offer for sale (OFS) of 1.23 crore shares worth Rs 471 crore at the upper end of the price band. This takes the total IPO size to Rs 599 crore. Promoter Peak XV Partners Investments V (formerly known as SCI Investments) and shareholders Bisque Limited and Link Investment Trust will offload shares in the OFS.
At present, Peak XV holds 22.86 per cent stake in Awfis Space Solutions, Bisque and Link Investment Trust own 23.47 per cent and 0.36 per cent stake, respectively, in the company. Proceeds from the fresh issue would be used towards funding capital expenditure towards setting-up new centres, supporting working capital requirements, and general corporate purposes.
The company said that 75 per cent of the issue size has been reserved for qualified institutional bidders (QIBs), 15 per cent for non-institutional investors and the remaining 10 per cent for retail investors. Investors can bid for a minimum of 39 equity shares and in multiples of 39 equity shares thereafter.
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Awfis Space Solutions provides a wide spectrum of flexible workspace solutions ranging from individual flexible desk needs to customised office spaces for startups, small and medium enterprises as well as for large corporates and multi-national corporations. ICICI Securities Limited, Axis Capital Limited, IIFL Securities Limited, and Emkay Global Financial Services Limited are the book-running lead managers to the public issue.
