Indiqube Spaces IPO review (May apply)

•    The company is engaged in managed and tech savvy workplace solutions that are having good demand in southern region. 
•    The company enjoys good market share as well as preference amongst IT giants.
•    While its top line marked steady growth, it posted losses for reported years on account of Ind AS accounting standards.
•    Based on its losses for the last three fiscals, the issue is priced negatively.
•    Well-informed/cash-surplus investors may park moderate funds for medium to long term.

ABOUT COMPANY:
Indiqube Spaces Ltd. (ISL) is a managed workplace solutions company offering comprehensive, sustainable, and technology-driven workplace solutions dedicated to transforming the traditional office experience. Led by an experienced management, with entrepreneurial track record since 1999, its diverse solutions range from providing large corporate offices (hubs, i.e., the main office of clients wherein key functions, leadership teams, and primary operations are based, and is typically located in a central or strategic area) to small branch offices (spokes, i.e., smaller, decentralized office spaces of clients spread across different cities or regions) for enterprises and transforming the workplace experience of their employees by combining interiors, amenities and a host of value added services which are incremental to the workspace leasing provided by ISL and comprise amenities, green initiatives, designed interiors, B2B and B2C solutions ranging from facility management, sale of goods, asset maintenance and plantation to catering, and transportation services for the employees of clients and technology applications, through contracts with clients occupying the space within its centers or third-party clients (“VAS”).

It complements solutions through backward and forward integration capabilities. While backward integration focuses on asset renovation, upgradation and customized build-to-suit models, forward integration enables it to provide business-to-business (“B2B”) and business-to-customer (“B2C”) VAS to clients and their employees. These, coupled with ISL’s core offering of plug and play offices, enable it to serve the workspace value chain comprehensively. It manages a portfolio of 115 centers across 15 cities, consisting of 105 operational centres and 10 centres for which it has executed letters of intent, covering 8.40 million square feet of area under management (“AUM”) in super built-up area (“SBA”) with a total seating capacity of 186,719 as of March 31, 2025. The company has expanded its portfolio by 3.46 million square feet of AUM with the addition of 41 properties and five new cities between March 31, 2023 and March 31, 2025. 

In Bengaluru, it has a portfolio of 65 centers spanning 5.43 million square feet in AUM as of March 31, 2025. Bengaluru currently is both the largest commercial office and flexible workspace market of India accounting for around 30% of the total flexible workspace stock amongst Tier I cities. It is amongst the leading operators in Bengaluru as of March 31, 2025. (Source: CBRE Report) ISL’s supply acquisition strategy prioritizes acquiring full buildings in high-demand micro-markets with robust infrastructure connectivity, low vacancy rates, and strong talent catchments. This targeted approach ensures the long-term relevance of its offerings while enabling it to scale rapidly. The company partners with landlords to not only lease new properties, but also transform non-institutional and aging Grade B properties into high-quality, green and modern workspaces. It upgrades these properties by integrating interiors, amenities, technology, and sustainability initiatives. 

As of March 31, 2025, such renovated properties comprise 2.48 million square feet or 29.57% of its total portfolio. ISL’s demand strategy of ‘enterprise first’ focuses on partnering with businesses seeking scalable, customizable and on-demand workspaces of large sizes for a long tenure. As of March 31, 2025, clients with over 300 seats, account for 63.06% of its total portfolio with an average lock-in of 36 months. Brand ‘IndiQube’ stands at the core of its business enabling the company to serve, as of March 31, 2025, 769 clients of which 59.56% were acquired directly by it. The credibility of its brand is demonstrated by global capability centers (“GCCs”) comprising 43.56% of its clientele as of March 31, 2025. Further, the remaining 56.44% of its clientele as of March 31, 2025 comprises Indian enterprises. This demonstrates a balanced portfolio that bridges the needs of domestic businesses and multinational corporations. It had 586 total number of contracts for FY2025 against 183 for FY2023.

Its business model is reflected in company’s strong financial and operational metrics, occupancy rate in steady state centers of 86.50%, return on capital employed of 34.21% and cash EBIT margins of 10.81% as of March 31, 2025. These metrics, along with a CRISIL A+/Stable credit rating as of March 31, 2025, highlight its financial stability and underscore operational consistency and ability to retain high-value enterprise clients. As of March 31, 2025, it had 689 employees on its payroll (including on contract employees).

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden/combo book building route IPO of fresh equity shares issue worth Rs. 650.00 cr. (approx. 27426160 shares at the upper cap), and an Offer for Sale (OFS) of Rs. 50.00 cr. (approx. 2109705 equity shares at the upper cap). Thus, the overall size of the IPO is for Rs. 700.00 cr. (approx. 29535865 shares at the upper cap). The company has announced a price band of Rs. 225 – Rs. 237 per equity shares of Re. 1 each. The issue opens for subscription on July 23, 2025, and will close on July 25, 2025. The minimum application to be made is for 63 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 14.06% of the post-IPO paid-up equity capital. From the net proceeds of the fresh equity issue, the company will utilize Rs. 462.65 cr. for capex on establishing new centers., Rs. 93.04 cr. for repayment/pre-payment of certain borrowings., and the rest for general corporate purposes. 

The company has reserved equity shares worth Rs. 1.50 cr. (approx. 63291 equity shares at the upper cap), for its eligible employees and offering them a discount of Rs. 22 per share. 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 joint Book Running Lead Managers (BRLMs) to this issue are ICICI Securities Ltd., JM Financial Ltd., while MUFG Intime India Pvt. Ltd. is the registrar to the issue. JM Financial Services Ltd. is a syndicate member.

Having issued initial equity shares at par, the company issued further equity shares in the price range of Rs. 6562.09 – Rs. 25195.96 per share (based on Re. 1 FV), between June 2018, and May 2025. It has also issued bonus shares in the ratio of 15 for 1 in September 2019, and 70 for 1 in December 2024. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. NIL per share. 

Post-IPO, its current paid-up equity capital of Rs. 18.26 cr. will stand enhanced to Rs. 21.00 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 4977.12 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit/ - (loss), of Rs. 601.28 cr. / Rs. – (197.90) cr. (FY23), and Rs. 867.66 cr. / Rs. – (341.74) cr. (FY24), Rs. 1102.93 cr. / Rs. – (141.05) cr. (FY25). According to the management, this losses at net level is due to accounting adjustments under Ind AS accounting standards.

According to the management, with their niche play with well furnished and excellent ambience, it is winning customers preference to modern office spaces solutions at affordable cost, and with rising fancy as well as demands, scope of performing better and turning the corner in near term is expected.

For the last three fiscals, the company has posted an average negative EPS of Rs. – (15.07) and an average RoNW of NA. The issue is priced at a P/BV of NA based on its NAV of Rs. – (0.24) as of March 31, 2025, and at a P/BV of NA based on its post-IPO NAV of Rs. – (0.15) per share (at the upper cap). 

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 NA. Based on FY24 earnings, the P/E stands at NA. Thus, the issue is negatively priced in context of its loss-making status for the reported periods, which is attributed to Ind AS standards for accounting. 

The company has not reported PAT margins due to losses, its RoCE margins stood at 15.66% (FY23), 38.52% (FY24), 34.21% (FY25).  

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 December 2024, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Awfis Space Solutions as its listed peer. It is trading at a P/E of 107.0 (as of July 18, 2025). However, they cannot be truly compared on an apple-to-apple basis. 

MERCHANT BANKER’S TRACK RECORD:
The two BRLMs associated with the offer have handled 78 pubic issues in the past three fiscals, out of which 18 issues closed below the offer price on the listing date.