Smartworks lifts FY27 revenue outlook to 33–35% after H1

Smartworks Coworking Spaces Limited raised its FY27 revenue-growth guidance to 33–35% from 28–30% after H1 FY27 revenue from operations rose 41% year on year to Rs 1,137.6 crore. Smartworks reported a normalised EBITDA margin of 19.7%, up 340 basis points year on year, while reaffirming its FY27 space and capital-expenditure targets as at 30 September 2026.

Why did Smartworks raise its FY27 revenue-growth guidance?

Smartworks raised its FY27 revenue-growth outlook to 33–35%, compared with its previous 28–30% range, after revenue from operations increased 41% year on year in H1 FY27. At the midpoint, the revised range is 5 percentage points above the previous midpoint. Smartworks retained its 19–20% normalised EBITDA-margin outlook, with the H1 margin of 19.7% near the upper end of that range.

The revised-outlook table reported about Rs 5,800 crore of contracted rental revenue at 30 September 2026. Smartworks also reported that about 41% of rental revenue came from the cohort with more than 1,000 seats, while multi-city clients accounted for about 35% of rental revenue. Enterprise rental revenue represented about 91% of the total.

Quarterly revenue from operations rose in each of the six quarters from Q1 FY26 to Q2 FY27. Revenue increased from Rs 379.2 crore in Q1 FY26 to Rs 591.4 crore in Q2 FY27, a 56% increase across the period. Q2 FY27 revenue was 8% higher quarter on quarter and 39% above Q2 FY26.

How did Smartworks’ H1 FY27 profitability change?

Smartworks reported H1 FY27 normalised earnings before interest, tax, depreciation and amortisation, or EBITDA, of Rs 223.8 crore, up 71% year on year. Its normalised EBITDA margin expanded by 340 basis points to 19.7%, while normalised profit after tax, or PAT, rose 161% to Rs 82.2 crore. The normalised PAT margin increased 330 basis points to 7.2%.

In Q2 FY27, Smartworks recorded normalised EBITDA of Rs 116.9 crore, up 9% quarter on quarter and 68% year on year. The Q2 normalised EBITDA margin was 19.8%, compared with 19.6% in Q1 FY27 and 16.4% in Q2 FY26. Smartworks attributed the margin progression to centre and corporate costs scaling more slowly than revenue, energy-efficiency initiatives and contributions from mature centres.

The six-quarter margin trend moved from 16.2% in Q1 FY26 to 19.8% in Q2 FY27, an increase of 360 basis points. Q2 FY27 normalised PAT was Rs 43.4 crore, up 12% from the preceding quarter and 136% from the year-earlier quarter. The company labels these normalised financial measures as non-GAAP measures unless otherwise stated.

How is Smartworks expanding capacity and occupancy?

Smartworks had 10.9 million square feet of operational space at 30 September 2026 and reaffirmed its FY27 period-end target of 12.5–13.0 million square feet. Management expects two mega campuses totalling about 1.7 million square feet to become operational in H2 FY27. The presentation states that Smartworks adds capacity faster than it fills it by design.

Total space under the company’s stated total saleable built-up area, or SBA, measure was 17.5 million square feet, including leased space and space covered by letters of intent, term sheets or heads of terms. This was up 0.6 million square feet quarter on quarter and 4.8 million square feet year on year. Operational space increased by 0.5 million square feet sequentially and 1.8 million square feet year on year.

Smartworks reported about 201,000 occupied seats in its operational portfolio, up about 8,000 quarter on quarter and about 33,000 year on year. Total occupied seats were about 249,000, while the network comprised 71 centres in 15 cities. Overall occupancy was 81% and unchanged year on year, while mature occupancy was 88%, down 100 basis points year on year.

The mature portfolio covered 9.7 million square feet, with committed mature occupancy of 91%, down 200 basis points year on year. Since its June 2025 initial public offering, Smartworks has added 5.6 million square feet of SBA, equivalent to 47% of area added since that date. The planned H2 FY27 campus openings are central to reaching the 12.5–13.0 million-square-foot operational-space target.

What do Smartworks’ cash spending and returns show?

Smartworks reported capital expenditure of Rs 306.6 crore in H1 FY27 and reaffirmed its FY27 capital-expenditure outlook of Rs 550–600 crore. Q2 FY27 capital expenditure was Rs 155.6 crore, up 64% year on year. The company said the spending was investment for future growth while maintaining its 19–20% normalised EBITDA-margin outlook.

Normalised operating cash flow, or OCF, was Rs 202.2 crore in H1 FY27, while free cash flow, or FCF, was negative Rs 104.4 crore. In Q2 FY27, normalised OCF was 0.9 times normalised EBITDA, unchanged from Q1 FY27. Smartworks said OCF excluding net deposits for buildings not yet open was about 1.0 times EBITDA.

Gross debt was Rs 233.7 crore and net debt was Rs 82.7 crore at 30 September 2026. Smartworks reported a cost of borrowing below 9% for term loans and a CARE A stable rating. Q2 FY27 normalised return on capital employed, or ROCE, was 21.6%, 10 basis points higher quarter on quarter and 800 basis points above Q2 FY26.

Management said about Rs 200 crore had been invested in capital expenditure and security deposits for upcoming centres, representing about 20% of normalised capital employed. It expects reported OCF-to-EBITDA conversion to remain below 1 times through Q4 FY27 while deposits are paid for the two H2 campuses. Management expects conversion above 1 times during FY28 as the campuses open and deposits return, with FCF following a few quarters later.

Conclusion

Smartworks lifted its FY27 revenue-growth outlook after reporting H1 revenue growth of 41%, normalised EBITDA growth of 71% and a 19.7% margin. The presentation shows revenue and quarterly EBITDA rising over six quarters, while the company maintained its FY27 EBITDA-margin range despite capital expenditure of Rs 306.6 crore in H1 FY27.

The next disclosed items to watch are the planned H2 FY27 opening of two campuses totalling about 1.7 million square feet, progress towards 12.5–13.0 million square feet of operational space, and capital expenditure within the Rs 550–600 crore FY27 plan. Management also expects OCF conversion to remain below 1 times through Q4 FY27 before improving in FY28 as the new campuses open and deposits return.