Election uncertainty weighs on Awfis Space Solutions' debut: Should you hold or exit?

Awfis Space Solutions, a leading player in India's flexible workspace market, witnessed a decent listing on Thursday despite falling short of expectations.

The company's shares debuted at Rs 435, a gain of over 13% compared with the issue price of Rs 383. The debut slightly missed the estimates due to the uncertain market environment ahead of the Lok Sabha election results.

Analysts said Awfis Space Solutions' listing presents a decent starting point on the back of the company's ranking no 1 among the top 5 benchmarked players in India in the flexible workspace segment.

"The strong subscription highlights the attractiveness of the co-working space market, but the company's financial situation requires ongoing monitoring," said Shivani Nyati, Head of Wealth, Swastika Investmart.

The issue received an overwhelming response from investors with an overall subscription of over 100 times at close.

The company said it plans to utilise the net proceeds from the fresh issue of shares for expansion and establishing new centres, working capital requirements and general corporate purposes.

"Despite challenges, the management is showing confidence that the company can turn net cash positive by the next fiscal year. They anticipate bright prospects ahead, driven by the significant demand and supply gap in the flexible workspace segment in which Awfis operates. Considering the markets mood for next 4-5 days we recommend allotted investors to book 50% profits today and hold the rest for short term with a target of Rs 470-500 with stop loss below Rs 412," said Prashant Tapse of Mehta Equities.

Awfis is the largest flexible workspace solutions company in India as on December 2023, based on a total number of centers.

The company provides a wide spectrum of flexible workspace solutions ranging from individual flexible desk needs to customized office spaces for start-ups, small and medium enterprises as well as for large corporations and multinational corporations.

Its operating revenue for the nine months ended December 2023 came in at Rs 616 crore. For FY23, the company’s operating revenue had more than doubled from FY22 at Rs 545 crore.

Awfis, however, continues to incur losses. For the April-December 2023 period, the company reported a loss after tax of Rs 18.9 crore. For FY23, its net loss came in at Rs 46.6 crore, compared with Rs 57.3 crore in FY22.