Awfis Space shares zoom 17% on expansion in Bengaluru; know brokerage view

Diversified commercial services company Awfis Space Solutions Ltd. shares hit an all-time high on Thursday after the company expanded its footprint in Bengaluru by unveiling 66,846 sq. ft. of workspace. The shares of the Bengaluru-based startup, which listed on the exchanges on May 30, 2024, saw a gap-up opening today, hitting the ₹945-mark on the BSE, up 16.6%. With this, shares of Awfis have grown 154.3% since hitting an all-time low of ₹371.75 on June 4, 2024. At the current share price of ₹893.15, the company's m-cap stands at ₹6,200.22 crore.

The flexible workspaces company announced the launch of two new centres at Mantri Commerce and Vista Pixel in Bengaluru on Wednesday i.e August 21. The centres offer 39,000 sq. ft. and 27,846 sq. ft. built-up areas respectively.

Amit Ramani, MD and Chairman, Awfis Space Solutions, says Bengaluru is poised for exponential growth. "The demand for high-end workspaces will continue to surge in the years to come. Our new centres are strategically located to cater to this growing need.”

As of June 2024, Awfis operated 1,12,038 seats across 185 centres, covering 5.6 million sq. ft. across 17 cities. The company says its 'asset-light and risk-averse approach' via managed aggregation (MA) model applies to 64% of its centres and 67% of its seats. It has plans to add 40,000 new seats in FY25, which will total 135,000 by the fiscal year-end.

There has been a surge in demand for flexible spaces, with 68% CAGR growth in startups since 2019, according to an August-20 analysis of Awfis Space Solutions by brokerage Nuvama Wealth and Investment. It has maintained a "BUY" rating on the stock, with a current price target of ₹1,013, an upside of 35% from Aug-20's closing price.

"AWFIS has guided at addition of 40,000 seats for FY25. Of these, 15,510 seats are already under fit-outs. Another 16,522 are under negotiation, where LoI has been signed. Its human infrastructure has the capacity to handle an additional 50,000 seats per annum. We expect an addition of 35,000/33,000 seats in FY26E/FY27E. We see total seats at 203,030 as of March 2027, a CAGR of 28.8% over FY24-27E," Amit Agarwal and Rishith Shah write in Nuvama's report.

India's office market activity grew to 34.7 million sq. ft. in the first half of 2024, up 33% from 26.1 mn. sq. ft. in the year-ago period, according to a recent Knight Frank report.

"The Indian office market will be characterised by increasing space uptake from domestic origin occupiers, expansion of Global Capability Centers (GCCs), and growing prominence of sustainable elements including “green leases”. Occupier segment demand base diversification is poised to continue, further enriching the commercial real estate landscape. For occupier strategies, the “core plus flex” approach is likely to be prevalent throughout 2024," Vimal Nadar, Senior Director & Head of Research, Colliers India told Fortune India.

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