down 25% in a month! Recent D st debutant see analyst interest with 55% upside target

Choice Institutional Equities has initiated coverage on recently listed SmartWorks Coworking Spaces, which made its stock market debut in July 2025. The valuation derives from a 12-month forward EV/Adjusted EBITDA multiple of 15 times, as indicated in the brokerage’s initiating report. SmartWorks is highlighted by Choice for its rapid six-fold expansion in India’s managed office segment over four years, propelled by an asset-light model. The company secures entire Grade-A properties, with 76% of its portfolio leased from non-institutional landlords, such as HNIs and family offices, supporting cost efficiency and economies of scale. The brokerage notes SmartWorks’ annuity-driven approach ensures predictable, REIT-like cash flows. Mature centres operate at 88% occupancy, achieving payback in roughly 36 months. The company maintains low capital expenditure (INR 1,350 per sq ft) and operating expenses (INR 30–35 per sq ft), contributing to accelerated breakeven and robust returns. Shares of SmartWorks Coworking Spaces dropped more than 2.6% during the trading session on Monday, with its total market capitalization slipping below Rs 5,500 crore mark. The stock settled at Rs 480.15 on Friday. It has gained nearly 20 per cent from its all time low at Rs 393.35 hit in July 2025, while it is down 25 per cent from its all time high hit a month ago. Choice observes that SmartWorks targets enterprise clients, with notable names including Google, Groww, and EY. Clients acquiring over 300 seats account for 65% of H1FY26 revenue, with those above 1,000 seats contributing 35%, underpinning recurring income and long-term relationships. India’s flexible workspace sector is projected by Choice to expand at a CAGR of 13.7% between CY25 and CY30, nearly double the overall office market rate. Growth is expected to be led by global capability centres, BFSI, and IT services, driven by India’s sizeable STEM talent pool. SmartWorks’ resilience is supported by long-term agreements with landlords (approximately 15 years) and enterprise clients (around 4 years), facilitating occupancy and rental stability. The revenue-to-rent ratio stands at 2.0x, with the top 10 clients contributing less than 20% of revenue and multi-city tenants about 30%, thereby managing concentration risk. SmartWorks Coworking spaces made its stock market debut in July 2025, when the company raised a total of Rs 582.56 crore via IPO, by selling its shares for Rs 407 apeice. The stock is currently 15% above its IPO price. The company’s operational footprint spans 19 clusters in 9 Tier 1 Indian cities, four Tier 2 cities, and Singapore, minimising geographical risk. The focus on Tier 1 markets is viewed as favouring premium demand and reduced vacancy, with mature centres maintaining nearly 85% occupancy even during the pandemic. Choice Institutional Equities cautions on key risks such as SmartWorks’ reliance on global capability centres, IT, and BFSI sectors, which may heighten exposure to sector-specific downturns. Around 94% of revenue is annuity-based, making the company sensitive to demand shocks, while liquidity remains moderate with restrained trading volumes. "We initiate coverage on SmartWorks with a 'buy' recommendation and target price of Rs 630, which is an upside of 31%. Our base case scenario target is Rs 630 and upside scenario fair value is Rs 720 while our downside scenario fair value is Rs 547," it added. Choice's bull case target price suggest nearly 55% upside in the stock.