Dev Accelerator IPO review

•    The company is one of the largest flex space operators in major metros and Tier-1, Tier-II cities.
•    It has marked growth in its top and bottom lines for the reported periods with turnaround from FY24 onwards.
•    It is operating in a highly competitive and fragmented segment.
•    Based on its recent financial data, the issue appears aggressively priced.
•    Only well-informed/cash surplus investors may park moderate funds for long term. Others may skip.

ABOUT COMPANY:
Dev Accelerator Ltd. (DAL) is one of the largest flex space operators in terms of operational flex stock in Tier 2 markets (Source: JLL report). Since its inception, it has established presence in both Tier 1 and Tier 2 markets across India, including regions such as Delhi NCR, Hyderabad, Mumbai, Pune, Ahmedabad, Gandhinagar, Indore, Jaipur, Udaipur, Rajkot and Vadodara as of May 31, 2025. Its comprehensive office space solutions include sourcing office spaces, customizing designs, developing spaces and providing technology solutions to providing complete asset management. This means DAL not only creates and manages office environments but also ensure that they operate efficiently, allowing clients to focus on their core business activities. For this purpose, it ensures property upkeep, including regular cleaning, HVAC (heating, ventilation, and air conditioning) maintenance, plumbing, electrical systems, housekeeping, administrative assistance, etc. This ensures that the office environment is always ready for use, without clients needing to manage these day-to-day operational tasks.

As on May 31, 2025, we have over 250 clients and 28 centers across 11 cities in India, with 14,144 seats covering a total area under management of SBA 860,522 square feet. Its clientele comprises of large corporates, MNCs and SMEs, to whom it offers a variety of flexible office space solutions such as managed office spaces and coworking spaces as well as design and execution services through its Subsidiary, Neddle and Thread Designs LLP. Its primary focus is on serving large corporates by offering managed office solutions. Such offerings have average lease tenures ranging from 5 to 9 years, with lock-in periods of 3.5 to 5 years. These longer lease commitments provide a stable and predictable revenue stream, help build stronger relationships with occupiers potentially leading to contract renewals or expansions in the future, and achieve operational efficiency in the managed space segment (Source: JLL Report). Its understanding of the modern workforce has enabled the company to deliver customized solutions for clientele. This has established DAL as a comprehensive, one-stop platform for flexible workplace. As May 31, 2025, it had 182 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of fresh 23500000 equity shares issue (worth Rs. 143.35 cr. at the upper cap) The company has announced a price band of Rs. 56 – Rs. 61 per equity shares of Rs. 2 each. The issue opens for subscription on September 10, 2025, and will close on September 12, 2025. The minimum application to be made is for 235 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 26.06% of the post-IPO paid-up equity capital. From the net proceeds of the fresh equity issue, the company will utilize Rs. 73.12 cr. for fit-outs in proposed centers, Rs. 35.00 cr. for repayment/prepayment of certain borrowings, and the rest for general corporate purposes. 

The company has reserved 164500 equity shares (worth Rs. 1.00 cr. at the upper cap) for its eligible employees, 329000 equity shares for the shareholders of Dev Info. Technologies (worth Rs. 2.01 cr. at the upper cap), and from the rest, it has allocated not less than 75% for QIBs, not more than 15% for HNIs, and not more than 10% for Retail investors. 

The sole Book Running Lead Manager (BRLM) to this issue is Pantomath Capital Advisors Pvt. Ltd., while KFin Technologies Ltd. is the registrar to the issue. Asit C Mehta Investment Interrmediates Ltd. is a syndicate member.

Having issued initial equity shares at par, the company issued further equity shares in the price range of Rs. 11445.60 – Rs. 41789.00 per share (based on Rs. 2 FV), between March 2022 and September 2024. It has also issued bonus shares in the ratio of 900 for 1 in September 2024. The average cost of acquisition of shares by the promoters is Rs. 0.59, and Rs. 0.81 per share. 

Post-IPO, its current paid-up equity capital of Rs. 13.34 cr. will stand enhanced to Rs. 18.04 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 550.14 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit/ - (loss), of Rs. 71.37 cr. / Rs. – (12.83) cr. (FY23), Rs. 110.73 cr. / Rs. 0.44 cr. (FY24), and Rs. 178.89 cr. / Rs. 1.77 cr. (FY25). The company has turned the corner from FY24 and posted improved performance for the last two fiscals. Its debt-equity ratio of 2.39 as of March 31, 2025 raise alarm.

For the last three fiscals, the company has posted an average negative EPS of Rs. – (0.26) and an average RoNW of – (172.86) %. The issue is priced at a P/BV of XX based on its NAV of Rs. 7.68 as of March 31, 2025, but its post-IPO NAV data is missing from offer documents.

If we attribute FY25 annualized earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 305.00. Based on FY24 earnings, the P/E stands at 1220.00. Thus, the issue is aggressively priced. 

The company reported PAT margins of – (17.98) % (FY23), 0.39% (FY24), 1.00% (FY25), and RoCE margins of 3.65%, 17.31%, 25.95% for the referred periods, respectively. 

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It has already adopted a dividend policy in September 2024, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Awfis Space, Smartworks Coworking, and Indiqube Spaces, ass their listed peers. They are trading at a P/E of around xx, xx, and xx (as of September 05, 2025). However, they are not truly comparable on an apple-to-apple basis.  

MERCHANT BANKER’S TRACK RECORD:
The BRLM associated with the offer has handled 13 pubic issues in the past two fiscals, out of which 2 issues closed below the offer price on the listing date.