Summary
Awfis Space Solutions Limited - Q3 FY26 Earnings Call Summary Monday, February 02, 2026 05:30 P.M. IST
Event Participants
Executives 4 Amit Ramani (Chairman & Managing Director), Ravi Dugar (Outgoing CFO), Sumit Lakhani (CEO), Sumit Rochlani (Incoming CFO)
Analysts 6 Adhidev (ICICI Securities), Aditya Sharma (Shikara Investments), Akshata Telisara (Aionios Alpha), Girish Choudhary (Avendus Spark), Siva (ithought PMS), Vikrant Kashyap (Asian Market Securities), Yashowardhan Agarwal (IIFL Capital Asset Management), Yash Kishlanshi (Individual Investor)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Operating Revenue | ₹382 crores | +20% YoY, +25% YoY for 9M FY26; driven by 38% growth in co-working segment. |
| Operating EBITDA (Ind AS 116) | ₹139 crores | +30% YoY; margins expanded +270 bps to 36.5% due to scale and mature center performance. |
| Normalized Operating EBITDA | ₹55 crores | +18% YoY; adjusted for Ind AS 116 lease rentals and accounting standards 109/102. |
| PAT (Excl. Exceptional) | ₹22 crores | +46.7% YoY from ₹15 crores; 9M FY26 PAT stands at ₹48 crores. |
| Total Operational Seats | 1,51,621 seats | +25% YoY; 8,000+ seats added in Q3; total capacity (inc. fit-out/LOI) at 1.77 lakh seats. |
| Blended Occupancy | 75% | +200 bps YoY; mature centers (12 months+) at 84% occupancy. |
| Average Client Tenure | 37 months | Increased from previous periods; average lock-in period stands at 26 months. |
| Net Debt-to-Equity | -0.06% | Negative net debt indicates a strong liquidity position with ₹96 crores in cash/investments. |
Geographic & Segment Commentary
- Co-working & Allied Services: Revenue grew 32% YoY to ₹322 crores, contributing 84% of total revenue. Growth is driven by high occupancy in mature centers and increased traction from 80+ GCCs (Global Capability Centers) which now contribute 21% of space revenue.
- Awfis Transform (Construction/Fit-out): Revenue declined to ₹60 crores due to GRAP-IV pollution norms in North India affecting execution and lower managed aggregation seat additions. Management maintains a strong third-party pipeline of 9 lakh sq. ft. (~₹200 crore opportunity).
- Geographic Expansion: Operates 257 centers across 18 cities with 100% of new supply focusing on Grade-A/A-minus assets. Tier-2 seat capacity grew 16% YoY, highlighting expansion beyond metros.
Company-Specific & Strategic Commentary
- GCC Focus: Targeted strategy to capture “first-time” GCCs (20-30 entering India per quarter) with 12 deals closed in 9M FY26. GCCs and large corporates now occupy 64% of total seats, with 500+ seat clients making up 36% of the portfolio.
- Asset-Light Growth: Continued emphasis on “Managed Aggregation” (MA) model for capital efficiency. Currently, 8 lakh sq. ft. of MA supply is committed, with 4.1 lakh sq. ft. already confirmed in prime markets.
- Premium Positioning: Shifting up the value curve with 32 premium centers (25 Gold, 7 Elite). 100% of new supply is Grade-A, catering to the specific compliance and scalability needs of MNCs.
- Management Transition: Mr. Ravi Dugar stepping down as CFO; Mr. Sumit Rochlani (formerly Head of Finance) appointed as CFO effective February 3, 2026.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Gross Seat Addition | 32,000 - 33,000 (FY26) | Revised down from 40,000 to focus on blended occupancy and margin protection amid a peak real estate cycle. |
| Exit Capacity | ~1,66,000 seats (March 2026) | Based on current centers under fit-out and operational ramp-up. |
| Annual Capex | ₹200 - ₹210 crores (FY26) | ₹159 crores spent in 9M; Q4 spend focused on Elite centers and GCC-specific straight-lease fit-outs. |
| Revenue Mix (Transform) | ~20% of Total Revenue | Long-term steady-state expectation as third-party projects normalize post-GRAP delays. |
Risks & Constraints
| Risk | Context |
|---|---|
| Regulatory/Execution | GRAP-IV pollution norms in North India directly caused project deferrals and revenue dips in the Transform segment in Q3. |
| Concentration/Customization | High-capacity dedicated centers (500+ seats) pose risks of high refurbishment costs and vacancy if anchor clients exit after the 36-60 month lock-in. |
| Real Estate Cycle | Peak commercial rentals may lead to high-cost seat additions; management is being “guarded” to avoid long-term non-conducive pricing. |
| Tax Transition | The company expects to exhaust carried-forward losses within the next 3-4 quarters, moving to a normal effective tax rate. |
Q&A Highlights
Occupancy & Churn
- Question: Why has the mature center occupancy plateaued at 84%? (Girish Choudhary)
- Answer: 84-85% is not considered steady-state; expect a 100-150 bps improvement in the next 1-2 quarters as specific lagging centers ramp up and signed pipelines go live (Sumit Lakhani).
Seat Addition Guidance
- Question: Why was seat addition guidance reduced from 40,000 to 32,000? (Vikrant Kashyap)
- Answer: Prioritizing blended occupancy and margins over volume. Management is avoiding high-priced deals at the peak of the real estate cycle and prefers organic, mid-sized center growth (Sumit Lakhani).
Capex Intensiveness
- Question: Why is Capex guidance unchanged despite lower seat additions? (Akshata Telisara)
- Answer: Nine-month additions were skewed toward “Straight Lease” models (vs. Managed Aggregation) and premium Elite centers/GCC setups which require higher upfront fit-out investment from Awfis (Sumit Lakhani/Ravi Dugar).
Transform Segment Margins
- Question: Why did Transform margins deteriorate? (Vikrant Kashyap)
- Answer: Transform is a fixed-cost business; revenue dips due to GRAP restrictions in the North caused under-absorption of personnel costs (Amit Ramani).
Key Takeaway
Awfis delivered a steady Q3 FY26 with 20% revenue growth and significant EBITDA margin expansion to 36.5%, despite headwinds in its construction segment. The company is successfully pivoting toward the GCC opportunity, with 80+ global centers now in its ecosystem and enterprise clients contributing the majority of demand. While management lowered gross seat addition guidance to 32,000-33,000 to protect margins and focus on occupancy (now at 75%), the underlying co-working business grew strongly at 38% YoY. Strategic focus remains on asset-light “Managed Aggregation” and Grade-A premium centers, though Q3 saw a temporary tilt toward straight-lease capex for specialized GCC requirements. Looking forward, the company expects a rebound in the Transform segment and improved blended occupancy as speculative centers added in late FY25 mature.
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