Smartworks FY26: Scale Crosses 10 Million Sq Ft Operational, Margins Expand, and FY27 Guidance Turns Specific

Smartworks Coworking Spaces Limited ended FY26 with a clearer operating narrative than most flexible workspace platforms. The company reported revenue from operations of INR 1,795.8 crore, up 31% year on year, and positioned FY26 as a transition year from a “scaling” phase to a “cash-compounding” phase.

The headline improvement was in profitability on a normalised basis. Normalised EBITDA rose 75% year on year to INR 314.4 crore, with margin expanding to 17.5% from 13.1% in FY25. Q4 FY26 was the highest-revenue quarter in the company’s history, with revenue from operations of INR 519.7 crore and normalised EBITDA of INR 98.7 crore at a 19.0% margin.

The company also highlighted three milestones: crossing 10.1 million square feet of operational area, achieving its first full year of reported PAT profitability under Ind AS, and reaching contracted rental revenue of INR 5,200 crore plus.

Q4 and FY26 performance: growth with operating leverage

Smartworks’ quarterly trajectory in FY26 showed consistent sequential growth, with revenue rising from INR 379.2 crore in Q1 FY26 to INR 519.7 crore in Q4 FY26. On the same base, normalised EBITDA moved from INR 61.4 crore in Q1 FY26 to INR 98.7 crore in Q4 FY26, and the margin expanded from 16.2% to 19.0%.

The company’s presentation and management commentary repeatedly linked this margin expansion to portfolio maturity and operating leverage. Mature centres were reported at 89% occupancy on 8.9 million square feet of matured area, with committed mature occupancy of 93%. Overall occupancy on the operational base was about 82%, which management attributed largely to new area becoming operational in Q4 that was still ramping.

A second important claim was cash conversion. The company presented OCF to EBITDA as a “proof point” of a negative working capital model. For Q4 FY26, normalised operating cash flow was INR 108.0 crore versus normalised EBITDA of INR 98.7 crore (1.1x). For FY26, normalised OCF was INR 356.4 crore versus normalised EBITDA of INR 314.4 crore (1.1x). However, free cash flow remained negative for the full year due to capex intensity.

The platform scale: footprint, supply visibility, and enterprise demand

By March 2026, Smartworks reported total footprint of 16.1 million square feet across 66 centres in 15 cities, including Singapore. Operational SBA stood at 10.1 million square feet, with 1.1 million square feet under fit-outs, 2.5 million square feet yet to be handed over, and 2.4 million square feet in LOI/term sheet/HOT stage.

Management framed supply access as a key moat. In the concall, the company stated 100% of FY27 supply is secured and visibility is over 80% for FY28, while the presentation stated supply visibility is secured entirely for FY27 and 75% plus for FY28. The operating logic is that in a supply-constrained Grade A office market, early access to large-format assets improves both growth and unit economics.

On demand, Smartworks leaned heavily on an enterprise-led portfolio. The presentation stated that around 90% of rental revenue comes from enterprise clients, around 69% of rental revenue comes from 300-plus seat clients, and multi-city clients contributed around 31% of rental revenue in FY26. Seat retention rate was stated as 88% for FY26.

The company also highlighted a shift toward larger deals. The 1,000-plus seat cohort contributed 37% of rental revenue in FY26 (and 40% in Q4 FY26 as per the press release narrative), with reported average tenure of about 49 months and lock-in tenure of about 36 months.

Returns and balance sheet: ROCE up, net debt turns negative

Smartworks emphasised return metrics as evidence of maturity-led economics. FY26 normalised ROCE was presented at 16.0% (up from 7.3% in FY25). Q4 FY26 annualised ROCE was presented at 21.5%. The company also introduced operating ROIC, reporting 16.4% for FY26 and stating 22.1% annualised for Q4 FY26 during the call.

The balance sheet narrative was equally central. As of March 31, 2026, gross debt was reported at INR 207.0 crore and net debt at INR -56.1 crore. The company described this as net-debt-negative and positioned it as supporting self-funded growth.

The improvement in cash position did not eliminate capex needs. Management indicated fresh capex of about INR 450 crore for approximately 3 million square feet of expansion plan, and stated the company would fund growth capex (and maintenance capex) through internal accruals.

FY27 outlook: explicit guidance and the key operating assumptions

Unlike many platform businesses that remain qualitative, Smartworks gave numerical guidance for FY27:

• Revenue growth of 28% to 30%
• Normalised EBITDA margin of 19% to 20%
• Operational footprint of 12.5 to 13.0 million square feet by March 2027

Management anchored the revenue guidance on signed contracts, stating that around 82.5% of FY27 revenue is already locked in via contracted rental revenue. It also suggested that new supply additions and faster ramp-up, supported by pre-fill, would keep margins stable even as the portfolio expands.

In Q&A, management stated that it typically has 20% to 25% visibility or pre-fill before committing to new assets. It also suggested net seat additions of 45,000 to 50,000 during FY27.

On inflation and fit-outs, the company indicated it had not seen incremental cost pressure in the first quarter and that it has built in a 5% increase in fit-out costs. It also disclosed maintenance capex parameters: maintenance capex is about 6% to 8% of normalised gross block, and maintenance capex per square foot is about 12% to 15% of initial capex per square foot.

Takeaways

Smartworks’ FY26 documents show a company trying to shift investor attention from pure footprint growth to repeatable economics: higher normalised margins, strong operating cash conversion, and improving ROCE. The company’s contracted rental revenue of INR 5,200 crore plus, and its statement that roughly 82.5% of FY27 revenue is already locked in, provides a clear anchor for its FY27 guidance.

The next year’s execution will hinge on two operational realities management itself highlighted: ramp-up of newly operational area (which currently pulls overall occupancy down versus mature levels) and continued capital discipline as the platform invests roughly INR 450 crore of fresh capex for expansion while keeping the balance sheet net-cash.