Awfis Space Solutions Ltd (NSE: AWFIS) Q3 2025 Earnings Call dated Feb. 12, 2025
Corporate Participants:
Girish Choudhary — Analyst
Amit Ramani — Founder and Chief Executive Officer
Sumit Lakhani — Deputy Chief Executive Officer
Ravi Dugar — Chief Financial Officer
Analysts:
Krishna Shah — Analyst
Unidentified Participant
Chintan Sheth — Analyst
Mohit Agarwal — Analyst
Yashowardhan Agarwal — Analyst
Shubham Kadhi — Analyst
Sabyasachi Mukerji — Analyst
Ashish Khurana — Analyst
Presentation:
Operator
Foreign. Ladies and gentlemen, good day and welcome to the Q3FY25 earnings conference call of Office Space Solutions Limited hosted by Spark Institutional Equities. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Girish Chowdhury from Spark Institutional Equities Private Limited. Thank you. And over to you, sir.
Girish Choudhary — Analyst
Yeah. Good morning everyone. On behalf of Spark Institutional Equities I would like to welcome you all to the third quarter earnings call of Office Space Solutions. The company is represented by Mr. Amitramani, the chairman and the managing director, Mr. Sumit Lakhani, the deputy CEO and Mr. Ravi Dugar, the CFO. I’ll now hand hand over the call to the management for opening remarks and then we can open up for Q and a over to Mr. Amitramani Sir.
Amit Ramani — Founder and Chief Executive Officer
Good morning and a very warm welcome to everyone present on the call. Along with me I have Mr. Sumit Lakhani, our Deputy CEO, Mr. Ravi Duvar, our CFO and SGA, our Investor Relations Advisors for Q3 and 9 months. Results.
We have uploaded our presentation on the exchanges and I hope everybody had an opportunity to go through the same. Let me start with a brief overview of the business for the quarter. We are pleased to report a strong financial performance in Q3FY25 with a revenue growth of 44% year on year to 318 crores. This growth was driven by contribution from newly added seed. Higher occupancy across established centers.
Our strategic center selection backed by research and groundwork has been instrumental in maintaining high occupancy levels. Our focus on maximizing utilization continues to yield results with occupancy steadily increasing in key locations. As of December 2024, exit funds occupancy stood at 73% while centers operational for over 12 months reached 84% reinforcing our strong demand and our leadership in flexible workspaces.
During the quarter, our co working and allied services segment grew by 52% to 243 crores contributing 77% to the total revenue. Meanwhile, the construction fit out project including our design built business experienced a robust growth of 35% reaching 73 crores and accounting for the remaining 23% of our revenue. Our EBITDA registered strong growth, increasing by 59% year on year to 107 crores with a margin of 33.8%, an improvement of 320 basis points over the same quarter last year. This expansion was driven by operating leverage from higher occupancy mature centers, successful absorption of additional seats and increased contribution from enterprise clients and allied services. I am pleased to share that we have surpassed 1,20,000 operational seats across 193 centers nationwide.
Moving closer to our target of 1:35,000 seats operational by March of 2025, including centers under fit out and letter of intent stages are Our total capacity now exceeds one 60,000 seats across 237 centers spanning an extensive 8.0 million square feet. I’m excited to announce that as of today we have surpassed the milestone of 200 operational centers. This achievement reflects our continued growth and commitment to delivering exceptional service. The demand for workspaces in tier 2 cities has risen significantly since the pandemic.
While tier 1 accounts for 85% of all commercial real estate demand, there is a growing trend in tier 2 cities as well as E commerce, quick commerce, IT services both local and global and many global capability centers are increasingly exploring these cities for talent. We are proud to say that office is the first one to go into tier 2 cities. We believe that India’s 5 to 10 trillion economy is going to be written in these cities. In line with this trend, we are further strengthening our presence by expanding into another tier 2 city, Lucknow. Since December 23rd we have grown our footprint in tier 2 cities by 29% increasing from 17 to 22 centers, reinforcing our commitment to these high potential markets.
We are highly optimistic about the co working sector fueled by strong demand for flexibility, speed and quality. The increased adoption of hybrid work models, the rise of remote work and the company seeking satellite office instead of relying solely on centralized headquarters will drive continued demand. These factors, along with others are expected to propel growth in the co working industry. Barring any unexpected macroeconomic challenges, we foresee the sector growing at an annual rate of about 20 to 25%. Let me hand over the call to Mr. Sumit Thani, our Deputy CEO to share Q3FY25 operational highlights. Over to you Sumit.
Sumit Lakhani — Deputy Chief Executive Officer
Thank you Ahmed. Good morning everyone. I would like to share with you the operational highlights for Q3 FY25. On the supply side, since December 2023 we have significantly expanded our footprint by launching 55 new centers and adding 41,786 new seats, strengthening our presence across nine Tier 2 cities and six new micro markets. This strategic expansion has enabled us to cater to the growing demand for flexible workspaces in emerging business hubs.
As a result, our total portfolio now stands at 214 centers comprising 142,000 seats and covering 7.2 million square feet of chargeable area. This milestone underscores our commitment to scaling our operations and enhancing accessibility for businesses of all sizes on year on year growth trajectory Our year on year growth trajectory remains strong.
Operational seats and centers grew by 52% and 40% respectively. Total seats and centers increased by 36% and 47% respectively. We have a strong expansion pipeline with signed Lois for 23 new centers adding 18,000 seats and approximately 0.8 million square feet of chargeable area. On the demand side, we have signed demand contracts for 15,000 new seats in Q3 FY25 and 40,000 new seats in nine months of FY25.
Our revenue base continues to be highly diversified. Approximately 66% of our occupied seats are taken by large corporates and MNCs while around 20% are occupied by SMEs and another 13% by startups with the remaining share attributed to freelancers. Additionally, 39% of our clients operate across multiple centers within our portfolio.
Our blended exit month occupancy has has remained consistent at 73% and for centers older than 12 months the occupancy rate stands at 84%. The total average client tenure is 33 months with a lock in period of approximately 24 months, demonstrating strong long term client commitment. Our client profile is well diversified with more than 3,000 active clients as on 21st December 2024. This concludes my update. I will now hand over to Ravi, our CFO for the financial discussion.
Ravi Dugar — Chief Financial Officer
Thank you Sumit. Good morning everyone and a very warm welcome to everyone. Let me give you a quick overview on our financial performance. For Q3 of FY25 our consolidated operating revenue stood at 318 crores, a growth of 44% on year on year basis the operating EBITDA stood at 107 crores which is a growth of 59%. On a YoY basis. The margin stood at 33.8% as against 30.6% in quarter 3 of last year which is a growth of 320 basis points in Q3FY25. Our PAT, excluding exceptional items, is at rupees fourteen crore versus a loss of rupees six crores in Q3 of last year. On the IGAAP equivalent basis which is adjusted for India’s one hundred and sixteen lease rentals, India’s 109 and India’s 102.
Our Q3FY25 are consolidated operating revenue stood at 317 crore again a growth of 45%. On a yoy basis the operating EBITDA stood at 47 crore which is a growth of 114%. On a yoy basis the margins stood at 14.7% as against 9.9% in Q3 of FY24 which is a growth of four hundred and eighty basis points for Q3FY25. IGAAP equivalent depreciation stood at 22 crores and finance cost at rupees two crores On a nine month basis for FY25 our consolidated operating revenues stood at 868 crores, a growth of 41%.
On a yoy basis. The operating EBITDA stood at two hundred and eighty six crores which is a growth of 61%. On a yoy basis the Margins are at 33% as against 28.9% in nine months of last year which is a growth of 410bps. On the I GAAP equivalent basis which is existed for again India’s 116 lease rental, India’s 109 and India’s 102. The nine month operating revenue stood at 866 crores, a growth of 41% on a YoY basis. The operating EBITDA stood at 119 crores, a growth of 155%. On a YoY basis the margin stood at 13.8% as against 7.6% in nine months of FY24. This reflects a growth of around 615bps for nine months.
FY25 IGAAP equivalent depreciation stood at 57 crores and a finance cost as rupees 4 crores in nine months of FY25. PAT excluding exceptional items is rupees 70 crores versus a profit of 7 crores in nine months of last year. Our ROC on an annualized basis has improved from 63% in Q3 of last year to 76% in Q3 of the current financial year. The company continues to have a comfortable liquidity position remaining debt free at the net level. Our debt to equity ratio at the net level has improved to 0.29 as of December 24th from a negative of 0.28 as of December 23rd. This is all from our end. We now open the floor for Q and A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star N1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment to all the question queue assembled. The first question is from the line of Krishna Shah from Ashika Stockbroking. Please go ahead.
Krishna Shah
Hi, good morning. So my first question is on the lines of the construction and put out revenue expected for this quarter. Now that we Already completed post 245 days in this quarter.
Amit Ramani
So let me repeat the question. I think I understand the question.
Krishna Shah
Yeah. So my question is to understand the revenue, segmental revenue coming from construction and fit out projects for Q4FY25 now that already completed close to 45 days of this quarter.
Sumit Lakhani
So our construction and fit out business is in line with our guidance that we have given which is roughly about 30% odd growth for this quarter. We did about 23% came from the construction fit out business and 77% came from our co working business. This will continue in this almost in a similar kind of a ratio for the final quarter as well.
Krishna Shah
Okay, got it. And can you just help me with the. What was the actual rental expense for the last quarter?
Sumit Lakhani
One second, we’ll give you that number. Just give us two minutes.
Krishna Shah
Yeah, sure.
Sumit Lakhani
61 crores.
Krishna Shah
61 crore. And what was it for the nine months of FY25?
Sumit Lakhani
169 crores.
Krishna Shah
Okay. And my last question is on the cost side. I just wanted to understand that cumulative, if we look the employee expenses and other expenses have increased as a percentage of net revenue for the quarter past price or Q3. So can you just explain like what was what led to this increase in the cost?
Sumit Lakhani
Sorry, you are saying in the quarter three of this year it has increased versus what.
Krishna Shah
From the previous quarter as a percentage of net revenue?
Sumit Lakhani
No, but we have seen a decline on this quarter versus the last previous quarter.
Krishna Shah
For the other expenses?
Sumit Lakhani
For employee benefits. You’re seeing.
Krishna Shah
Employee benefits have decreased majorly I think because we’ve removed.
Sumit Lakhani
Sure. So what has happened is because of this transition of our care business, the office facility management business to an outside company which is SMS integrated services, the employee expenses, the employees pertaining to that business, they have. The expense for that particular thing has moved to housekeeping and security services. So earlier that expense was appearing as an employee benefit expense. Now it is appearing as security and housekeeping expenses. That’s why the other expenses have gone up where at the same time we see a decline in the employee benefit expenses.
Krishna Shah
Okay. And it will be, it will continue in a similar manner going forward as well.
Amit Ramani
The accounting will continue to be in the similar manner. So this change has happened in Q3 essentially.
Krishna Shah
Okay. God. And in terms of percentage of net revenue also it’ll be on similar lines. Right?
Amit Ramani
Yeah.
Krishna Shah
Okay. Thank you so much.
Operator
Thank you. The next question is from the line of Akhil from Nuama. Please go ahead.
Unidentified Participant
Hello. Hello. Good morning.
Operator
Oh yes sir, you’re audible. Please go ahead.
Unidentified Participant
Yeah. Hello. Good morning. First and foremost Congress listens to the management team on delivering such a strong set of numbers. I have two questions. First question is could you please provide an update on the current status of the Office Care transaction?
Sumit Lakhani
Yeah, you can go ahead.
Ravi Dugar
So as you are aware our facility management division, namely Office Care were divested on a slump slate basis for a cash consideration of 275 million out of which we received 255 million in quarter three. Quarter two which was recognized in the quarter two financials of the balance consideration of 20 million to be received certain milestones and fulfillment of certain terms and conditions.
And as specified in the business transfer agreement, rupees 17.21 million has been recognized during the current quarter ended 31st December 24th. The same has been disclosed as an exceptional line item in Q3 and Q2 of FY25. And the financial results, the remaining amount of Rupees 3 million is expected to be received in in the current quarter which is quarter four of the financial year. Okay. So that will complete the transaction.
Unidentified Participant
Okay, got it. So my second question is. So as we are seeing with several co working space companies recently filing a drhp. So how do you foresee the competitive landscape evolving and what are the effects that could these developments on the market position and the strategic plan? Additionally, how does office perceive its position within this changing environment and what potential impact could this increased competition have on your business?
Ravi Dugar
So industry obviously as we can see is growing at a very very fast pace. Right. India growth pleasing has been the highest 77 million square feet, the highest ever in our history. Flex continues to be very very Strong with between 20 to 25% of the share on a year on year basis. So this makes us believe that there is a strong and a large market and enough room for everyone to operate. While we continue to hold the market leadership with 200 plus centers and our network, we believe that our ability to service our client base is very, very strong because of our product portfolio. If you look at the network that gives me the ability to service almost 100 plus localities today. So that means we can service clients in tier one and a large portion of tier two cities today.
Second, clearly we have built our product portfolio in a multi tiered product. As we had mentioned, our flagship product which is Office continues to be about 85% of our portfolio. Office Gold, which is a bit premium. And then Elite, which we had talked about last time in our earnings call is combined is about 15%. So today we can service every size of cohort and every price point in this country. And we believe that this network with this multi tiered kind of product portfolio creates a completely differentiated model.
Second, on our supply side we have talked about the managed aggregation model which makes us risk mitigated when it comes to our occupancy buildup. Because in majority of our portfolios, almost 65% today we are partnered with our landlord which is in a profit share model and the minimum guarantee is typically about 50% of the market rental. Second, a majority of the capital in this situation comes from our landlord partner. So this does two things. One, it makes us asset light and second, it mitigates a large portion of our risk. So on the supply side that makes a big differentiator and that results in a high return on capital employed for us.
As Ravi mentioned earlier, it’s about 75% plus and we are one of the only few players, branded players which are catering to all sizes of cohorts. Right. We have Talked about almost 55% of our portfolio today is more than 100 seats, 45% is less than 100 seats and which we see as a big competitive advantage. Plus we have the opportunity to have an integrated platform which creates multiple upselling opportunities. We are expanding DNB and our tech lab verticals. So we are confident that we will continue our upward trajectory based on these differentiating factors. And I think the and we believe the market is large enough that many large players can operate in this space.
Unidentified Participant
Understood, sir. Thank you. Thank you for the opportunity.
Operator
The next question is from the line of Chintan Seth from Girac Capital. Please go ahead. Hello Mr. Chintan, your line has been unmuted. Please go ahead with your question.
Chintan Sheth
Sorry, I was on mute. Thank you for the opportunity and great set of numbers. Couple of questions. You know if I look at the MA shift when we say the 83, 73% occupancy despite we adding significant seat addition, how do you feel the occupancy, you know to sustain at this level given the demand which you are witnessing in the market?
Sumit Lakhani
See, we expect the occupancy rate to stay stable in the future as well because this aligns the occupancy and the demand aligns with the velocity of our supply addition and uptick in our sales velocity and lower churn. If you see in this financial year so far over the nine month period we have sold closer to about 40,000 seats. In the full of last financial year, which is the financial year of 24, we sold closer to about 36,500 odd seats. So there’s a great increase in the overall new seat sold velocity.
And at the beginning of the year we gave the original guidance that the blended occupancy, the whole portfolio level was expected to be about 70 to 73%. The greater than 12 month center vintage occupancy expected to be between 83 to 85%. So we continue to track well on these numbers. Even the new centers which we are signing up, we see within nine to ten months that we are able to hit about 85% kind of occupancy. So with the growing portfolio we are very confident with respect to maintaining the overall blended occupancies.
Chintan Sheth
Right. Great. And if I look at your average seat revenue on the occupied seats or on the total, even if I look at that has stayed firm despite incrementally the tier 2 centers are getting added in the system which I presume has relatively lower rentals versus the Metro or tier one city. So incrementally how do you see, given that the model itself has a 5% escalation every year, how do you see your seed rentals likely to pan out going forward?
Sumit Lakhani
Yeah, at a portfolio level it’s a very interesting kind of question. I probably give you a bit more deep dive into the way we look at the seat pricing and the way model works. The seed pricing has a direct correlation to the micro market rental and the minimum guarantees which we have signed up with the space owner or at that prevailing period of time in the existing client contracts. For smaller cohorts, the general escalations which we have tied in ranges from 5% to 8%. In terms of the larger cohorts, the price escalations are usually between 4 to 6 odd percent. So at the time of renewals we get these kind of price increases.
But in a rental kind of cycle like what we are seeing right now, any new customer which comes in that center, we are able to get a much higher kind of seat realization because the seat realization is directly reflecting the current kind of rental trend. Now because we are across 50 plus micro markets almost about closer to 100 localities, different buildings which have very different kind of rental profile, the blended seat pricing prediction also becomes a bit of a challenge.
But on an overall basis when we look at building our financial models we look at closer to about 85% of the business continues to come from tier one cities. About 10 to 15% is coming from tier two cities. And minded tier two cities, a couple of tier two cities don’t have a lower rental profile as well. So at an overall level at a seat realization thing, we expect the seat realizations to be on a similar kind of a trend.
Chintan Sheth
Great, great. Couple of bookkeeping questions. Sumit1 is on the profit share rentals. If you can provide for the quarter and nine month visa vis last year just to have that sense of profit share of rental you provided the total rental cost. But if you can share the profit share under the MA model would be great. And second is on the ancillary revenue, what is the percentage right now? Because in the opening remark you mentioned that ancillary revenue is one of the key driver for the growth. If you can provide how that ancillary revenue has trended over the last nine months of quarterly vis a vis last year.
Sumit Lakhani
Just give us a minute, we’ll give you these numbers.
Chintan Sheth
Sure. I’ll join back in queue for. Yeah, yeah, thanks. Thanks. And all the way to you sir. Thank you. Yes sir.
Operator
Should we move on to the next question? Hello. The next question is from the line of Aman from Ashtute Investment Management. Please go ahead.
Unidentified Participant
Yeah. Good morning, sir. Good morning. Yeah. Are you through with your calculation for the last question or should I wait? Can you please go ahead with your question? Yeah, yeah. My first question is on our, on our cheat cohort. So we have around 3,000 odd customers. Could you talk about how many of these customers take say greater than 100 seats?
Sumit Lakhani
Yeah. So almost about 58% of our customers have taken. I’m talking from a seat basis. 58% of the customers have 100 plus seats.
Unidentified Participant
I was talking in terms of number of customers.
Sumit Lakhani
Oh, in terms of the number of clients, I think that number is not handy with us currently in terms of the number of clients on a code based basis.
Unidentified Participant
Okay. If you can share it in later part of the call.
Sumit Lakhani
Sure.
Unidentified Participant
Yeah. And my another question on this cohort of 100 plus seats, could you also talk about because it’s a very wide cohort, there will be some customer taking 300 seats, 500 seats. So is there a median in terms of number of seats that a customer take in this cohort? Because average won’t be the right number to take. And what is the typical churn rate in this kind of customer.
Sumit Lakhani
Sorry, can you repeat the second part of the question? I could understand the first part where you are asking in a hundred plus seat cohort, what is the usual median of seats which we look at? What is the second part of the question you asked?
Unidentified Participant
Second part was the choice because beyond the point, it might make sense for customers to look at their own centers. So just wanted to understand, say if a customer is above 300, 500 seats, then it’s more likely to churn. What kind of churn are we seeing in greater than 500 seats versus between say 100 to 300 seats?
Sumit Lakhani
Sure. Okay, so in terms of the average seats in 100 plus seater cohort, what we see is broadly about 360 approximately in our current portfolio. To your question earlier question on the number of clients for greater than 100 seats is closer to. It’s about between 140 to 150 clients who would have taken more than 100 seats. Now it’s a very interesting point. Where do a client looks at setting up their own center versus continuing to be in co working or continue to be in a flex space. Now the first part to this is we create a usual cost of ownership for a customer when in terms of choosing co working versus their own space till about 200, 250 odd seats. The total cost of ownership if a customer ends up choosing a flex space is in favor of flex spaces versus setting up their own office. And the savings ranges from about 3 odd percent to 20 odd percentage smaller the cohort. It is better for the overall customer to do in terms of the larger cohort of 200 plus or 250 plus seats.
The customers are generally choosing flexible operators for multiple reasons. One, they are looking at tenure flexibility. If you set up your own space, one is looking at being in that space for almost seven to eight years and depreciating the whole asset. So CFOs of those companies prefer doing that. Whereas if a operator like us is giving a three to five year kind of a lock in also it’s a great kind of flexibility for these customers. So flexibility in terms of tenure is one reason why a larger cohort, you know, let’s say 300, 500 seater cohort ends up using this.
Second lot of companies now are also not sure in terms of the overall business model, the growth and they want the option to upsize and you don’t downsize around. That’s the other reason. The third which is a massive reason and which brought about the behavioral change in the overall sector was the rise of distributed working. Today the companies are looking to set up more than one office location in a single city. And that’s the reason why we are seeing that the average size, what we talked about increasing in terms of flex portfolio. So these are the kind of your three reasons.
Till about three years back I would have given you a very clear answer that 300 to 400 seat is the code beyond which people will end up setting up their own conventional office. But the kind of deals we are seeing in the market and the kind of customer profile, this number is going upward of 500 or 600. That’s probably a kind of a cutoff in my mind where people should end up looking up their own offices.
Unidentified Participant
Sure, sir, this helps just one clarification. The number you said 360, is it average? I was looking for the median number which is the most common, not the average. Because…
Sumit Lakhani
This is so the current available data, which points which I had was around on, you know, the means. We’ll see if I can give you a median by end of the call.
Unidentified Participant
Yeah, yeah. My second question is on our MA model, Sir, it is a very remerative model for our company and even for landlord it is good because Rocs and everything is quite good. So we have explained in previous call that there are two returns that are landlord gets one is obviously the rental yield but he’s also getting a part of profit share and we had explained that the yield on the capex that the landlord does is around 10, 11%. This is in addition to whatever return he’s getting from the rental. So on this, this question is on this capex and this 10, 11% yield. So is my understanding correct? If a landlord is entering in a MA model and he’s spending his own money then he’s getting 10, 11% yield to get back that money. He’ll need nine to 10 years of lease to get back the money he has spent on capex. Is my understanding correct?
Sumit Lakhani
See the way I look at is the rental yield on a warm shell basis is closer to about 5 to 6%. Now in terms of the return on capex I would say it is primarily the return on. It’s more like a interest he’s earning on the capital he has spent. Right. So that is when I, when we say about 10 to 11 odd percent is the kind of, you know, return on that, you know, capital they look on an overall basis from a landlord perspective their usual payback ranges between four years to you know five years for the capex or you know a bit lower than that.
Unidentified Participant
Sorry, if the yield is 10% how is the payback 4 to 5 years you’re including…
Sumit Lakhani
Not the yield which is 10% I’m saying let’s say you know someone has spent about 5 odd crores into towards the capex so the annual interest or the return they get on that 10 odd crore only the, just the principal amount itself is about you know 40, 50 odd lakhs. Sorry. Yeah 50 odd lakhs, 10 odd percent and the overall payback period of the capital in which the total capital gets returned for the space owner is much lower in terms of the number of years because the. So that’s, that’s how it works. Right? Maybe I’ll get more clarification is on the side.
Operator
I wanted to. Mr. Aman can you please fall back in the queue for further questions?
Unidentified Participant
Sure sir, I’ll do.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to answer questions from all participants please limit your questions to two per participants and if you have more questions please come back in the queue. The next question is from the line of Mohit Agarwal from IIFL Capital. Please go Al.
Amit Ramani
So Mr. Chintan, the numbers what you wanted. Profit share for 9 months is 59.4 crores, 3 months is 19.4 crores for the current quarter and ASR is revenue for Q3 is 31.5 crores which in last year was 15 crores for the quarter three of last year which is a growth of 110%.
Operator
Go ahead, Mohit.
Mohit Agarwal
Yeah, hi, good morning everyone and congratulations to the team on great set of numbers. My first question is on margins and you know, if I look at your IGAAP equivalent margins, you’ve been clocking in for the last two quarters, about 15%. Is this the new normal at least in the near term or this margin number could be vulnerable to the kind of seat additions that you make. So you know, in the net to meet your guidance we’ll do almost 13 odd thousand, you know, seats that you’ll have to operationalize. So how do we look at the margins number and if you could give some color on, you know, how do we expect this over the medium term?
Amit Ramani
So Mohit, I think clearly when we started the year the guidance that we had given was about one and a half percent and obviously we have done much better than that. I think as far as the seat addition goes, I think the trajectory has been almost similar. As Sumit mentioned earlier, we’re looking to add in terms of supply about 40,000 new seats by March of 25th. And the Velocity of our seat sale has improved considerably from last year where last year for the full year we had done about 36 odd thousand seats. We have already for the nine month period run about 40,000 seats.
So obviously our seat addition is in terms of our new seat sale are keeping in pace and they’ll continue to be in that direction. So we have seen our operational ebitda grow from 9.9% in Q3 of FY24 to currently approximately the 15 odd percent which is obviously improvement. So this in itself is a significant improvement on back of our very strong revenue growth, occupancy, improvement in enterprise client allied services operating efficiency. So at the beginning of the year we had given the guidance of one and a half. What we have achieved right now, I think we will continue to maintain that for at least next quarter and we will at the end of next quarter in May give the guidance for FY26.
Mohit Agarwal
Okay, and actually that was my next question. But just you know, if you could give some color on what kind of seed addition considering the demand trends and the LOI sign, should we expect, you know, more or less the FY25 is done. So just in FY26, should we expect you to continue a 40,000 kind of a number in terms of seat addition? Could it accelerate just a broad color or directional color would be fine.
Amit Ramani
Yeah. So, Mohit, without going into specifics, I would just say at the beginning of the call we gave the guidance about one 20,000 odd seats that are operational today. In terms of under fit out and with centers where we have signed an LOI, we have additional 40,000 view. Our guidance for this full year was 1:35,000 seats. So we already operational seats. So we have a clear visibility of another 25,000 seats on top. So for FY26 we feel very, very strong about the continued growth of our supply addition of our seats. I would not want to make a specific comment on specific numbers. We will provide that at the next quarterly call.
Mohit Agarwal
Sure, that’s fine. And one last question on the construction fit out business. Yeah, I’ll join back with you. Yeah, yeah.
Operator
The next question is from the line of Ayush Sabo from Choice Equity. Please go ahead.
Unidentified Participant
Yeah, hi, can you give us some insights regarding the the rent per seat for the MA model and the SL model.
Amit Ramani
And also the capex cost that we incur the per seat for the MA and SL model. Yeah, so the capex cost, what we are incurring at this point of time is in the range what we gave in the prospectus. So it is in the range of around 54k per seat kind of a thing. So that’s a blended between MA and sl and obviously you know, an MA model our side, from our side, that’s a lower number.
And when you do a straight lease, that’s a higher number. Currently the portfolio managed aggregation is about 65 odd percent of our portfolio and 35% is straight lease. So when you blend it together, it’s that 54 odd thousand that Ravi mentioned. And hence our return on capital employed ends up being much higher around the 75% plus range.
Unidentified Participant
Okay. And also can you differentiate between like if you have to say like rent per seat for the MA model and the SL model. So what would that be?
Amit Ramani
So that is not really relevant because when we establish a center, be it MA center or a straight lease center, the seat realization is a reflection of the micro market rental. It is not a reflection of the model that we are deploying. So that is neutral as far as it goes. It just depends on the micro market rental and obviously you know, the specific city and micro market that we are operating in.
Unidentified Participant
Okay. Okay. So I mean there’s no way we can take an average rental per seat on a consolidated basis.
Amit Ramani
That you can still do. The only thing is, for us, rental is a function of the micromarket where we operate in. But at the company level you can calculate that number of interest.
Unidentified Participant
Okay, got it. Thank you.
Operator
The next question is from the line of Yasho Vardhan Agarwal from Arthur wealth and Investments. Please go ahead.
Yashowardhan Agarwal
Yeah. Hi sir. Congratulations. Good sets of limbo and I hope you all are doing very well. I have three questions on co working as well as on construction without segment. So on the co working segment the question is that what are the center level EBITDA margins in SLM model versus MM model and what are the other question has been answered. So the first question is on this.
Amit Ramani
So in terms of the you know as I think we have given the original guidance around it as well. When we do a straight lease the margin, the contribution margin at the center level ranges between 30 to to 35%. When it comes to the MA model this ranges between 20 to 24% depending on the structure with the specific landlord and such and the amount of investment that is being put in. So that’s where the blended then obviously comes somewhere in the range of what 24 to 25 odd percent.
Yashowardhan Agarwal
Got it sir. And so on the construction I’ll set out segment. So I want to know that how the segment is coming out and out of the revenue that we have done in this quarter say the total revenue of BNB segment of this construction was around 75 crores. So out of those 75 crores what part of that has come from the our own business? Let’s say the capex that has been done by the landlord. And what is the revenue that has come from the third party and how does the margin profile on both place?
Amit Ramani
Yes. Yeah. So in terms of the, you know the revenue it’s almost a 50, 50 split. 50% of the revenue comes from what our landlord partners are giving to fit out the center. And about 50% comes from third party clients. @ a contribution margin level this business is somewhere in the about blended between 16 to 17% margin.
Yashowardhan Agarwal
Sir, how is growth beam for the third party segment in this?
Amit Ramani
Growth has been fairly good. If you look at it on a year on year basis it’s about 40% odd growth that has happened in this segment.
Yashowardhan Agarwal
Okay, got it sir. And so the question on construction set out is that what is the working capital requirement?
Amit Ramani
Sorry, can you repeat the question?
Yashowardhan Agarwal
Yes sir. Without segment what is the working capital requirement?
Amit Ramani
So the working capital requirement you can get the number from the segment result. However to answer your question the requirement comes from the. You know so as the construction progresses we keep on billing the customer basis, the agreement which has been signed with the customer. So it could be a, you know, maybe a complete construction. Then we complete construction completion. So then we build to the customer, you know, once the construction is completed. Or there could be a milestone based billing also. So the working capital requirement normally arises from that side. So till the time we build to the customer, it consumes our working capital.
Yashowardhan Agarwal
Got it. So answer in terms of days…
Operator
I’m sorry to interrupt, sir, can you please come back in the queue?
Yashowardhan Agarwal
Sure, sure, I will come back in the queue. Thank you.
Operator
Thank you. The next question is from the line of Shubham Kadi from 3A Financial Services. Please go ahead.
Shubham Kadhi
Hello, good morning. Am I audible?
Amit Ramani
Yes.
Shubham Kadhi
Yeah. So I can see that quarter on quarter, the pack margins, that is the profit before exceptional items, the margin has pretty much remained the same so can actually decrease a bit. So can we expect the same margins going on or what? What can be the guidance regarding the back margin?
Ravi Dugar
So, so at the beginning of the year obviously we gave a guidance which was 1.5% and we are, you know, delivering more than that. So in the next quarter what we can say is we’ll continue with the growth trajectory. What we are seeing right now, however for the next year margins FY26, we’ll give a guidance, you know, maybe in the next quarter. Call.
Shubham Kadhi
Okay, sir. And the blended occupancy rate is around 75%, 74 to 75%. So do we see it increasing to around 80, 85% in the next couple of years?
Ravi Dugar
So in terms of the current next couple of quarters, we expect it to be in the range of about 70 to 73% on a blended basis over, you know, gradually over next couple of years you will obviously see, you know, the overall, the blended occupancy going up higher. Because the 12 month plus blended occupancy ranges between 83 to 85% for us, the centers at a vintage of 12 months plus. So as there are more centers as a percentage of the total portfolio which are in 12 month plus vintage, you will see improvement in the overall blended occupancy as well.
Shubham Kadhi
Okay, so thank you very much. And one of the questions asked by the previous analyst regarding the profit share in the MA model, is that figure available to us right now?
Ravi Dugar
Yes, I think we shared. Right. I’ll call out the Numbers Again. For 9 months the profit share is 59.4 Cr and for the quarter it is 19.4 Cr.
Shubham Kadhi
Okay, sir, that’s all from my end. I wish you the very best. Thank you.
Operator
Thank you. The next question is from the line of Shalvi Sachi Mukherjee from Bajaj Finser. Please go ahead.
Sabyasachi Mukerji
Yeah. Hi. First question is on the cash flows. If you can provide the cash flow from operations number for 9 month FY25 corresponding to the I GAAP equivalent EBITDA number of 119 crores that I see in the presentation. That would be.
Sumit Lakhani
So Sachi, I mean there’s no requirement to disclose the numbers in the nine month period. However we had done that in H1 and we’ll be doing that in the full year earnings call.
Sabyasachi Mukerji
If you can disclose the H1 number.
Ravi Dugar
H1 will tell you. Just give us a moment, Just give us a moment. We are opening the file for H1.
Sabyasachi Mukerji
Yeah, sure, sure. And also if you can give the FY24 number as well, full year number.
Ravi Dugar
We’ll come back on this. Just give us a minute. We are opening the file over here.
Sabyasachi Mukerji
Sure, sure.
Ravi Dugar
So for FY24, the cash flow from operations, including the income taxes speed, the net cash flow was 2 to 9 crores. And for the six months period the net cash flow from operating activity was 210 crores.
Sabyasachi Mukerji
No, no.
Ravi Dugar
All this is India’s.
Sabyasachi Mukerji
I’m asking for the I GAAP equivalent cash flow number. Because this cash flow number is inflated one, right?
Ravi Dugar
Yeah. So the IGA EBIT number, cash a bit, what you usually call it for H1 is 90.4 crores.
Sabyasachi Mukerji
And for FY…
Ravi Dugar
For SY24, 1/2 full year. You want H1 of last year, you want full year. Okay, just give me some.
Sabyasachi Mukerji
Sure. The reason why, I mean in the meantime, the reason why, why I’m asking is, you know, I’m going through your annual report and cash flow statement, consolidated cash flow statement where it says that 228 crores is the net cash flow from operations. But there is some. You know, there are two elements on the cash flow from financing activities, particularly on the payment of principal portion of lease liability and interest based on lease liability. Both this put together is close to 175 crores. I believe this number has to be adjusted to derive at the true cash flow number. If my math suggests right that number is somewhere around 54. 55 crores for the full year. 24. Please…
Ravi Dugar
Go cash EBIT number for the last financial it was 97 crores and for H1 it was 90 crores.
Sabyasachi Mukerji
Yeah but the cash flow, the, the, the, the true cash flow from operations number should be somewhere around 54.55crores for FY24. Am I correct?
Ravi Dugar
So it was 97crores. Okay. It was 97crores cash a bit. Yeah.
Sabyasachi Mukerji
Okay, maybe I’ll take this offline on the calculation front. But again coming back to that number so 9 if it it is 97 crores on that number we had done Almost I think 144 crores of capex last year. So basically our free cash flow is negative for FY24 and I believe H1 is also negative. So going ahead, what are our plans for the funding to sustain this kind of growth?
Ravi Dugar
So right now as I mentioned we are a net debt free company. Our debt to equity is minus 0.29. So we are sufficiently funded on the. And our liquidity position is very comfortable at this point of time and our internal accruals are also very strong. So to answer your question, the first part. Yeah. Last year it was, you know the net cash fund flow was a negative one. We were managing part of the capex from, you know, from our own sources, equity, not from the generations. However, this year we’ll be somewhere, you know we’ll be mostly meeting our capex requirement through our internal approvals. I mean given the kind of profitability what we’re experiencing.
Sabyasachi Mukerji
Okay, so there will no need for fundraise for the expansion plans?
Ravi Dugar
If you’re talking Q4 obviously. No, we are not going anywhere for a fundraise next year. I’ll not be able to comment at this point of time.
Sabyasachi Mukerji
Okay, got it. Okay, I’ll touch base offline on this. Thank you.
Operator
Thank you. The next question is from the line of Ashish Khurana from ANK Capital. Please go ahead.
Ashish Khurana
Good morning. Thanks for the opportunity. So I had two broad questions around competitive intensity that we are seeing in this sector. So firstly on the demand side. So as far as I can tell in the co working space there is no Indian brand with top of the mind. We call especially among the working population probably because the sector is in an early stage. So now, you know, it can be argued that AWFIS is uniquely positioned because firstly, I think the sheer number of centers are high and secondly, I think because of, you know, addressing smaller cohorts as well, the company is relevant to a larger number of people in general.
So my question on this was, do you think going forward in this industry or in this space, a consumer facing brand with good recognition and identity would be of relevance? And if so, what are the efforts that the company is putting in that regard? I mean, not just the efforts in terms of investments, but also in terms of, you know, execution, if you are, you know, conscious about that and putting specific efforts with regards to that.
Sumit Lakhani
Yeah, thanks Ashish. It’s a very interesting question. You answered a part of it for us. So the way we looked at approaching the brand was also by touching base into a larger kind of a customer segment, both smaller, mid sized and larger cohorts, and creating a much larger kind of a network. Now the way we look at our overall brand positioning and strategy is similar to what we say as of a hospitality player.
If you look at, we have created a multi tiered approach in terms of product, office, Office code and Elite. In our, you know, internal, you know, discussions, we look at similar to like a Courtyard by Marriott, Marriott and JW kind of approach to life. Across every brand, every center, there is a very consistent kind of experience which a customer, you know, gets. And this is where, because we are catering to a B2B customer base and the relevant number of companies or the TAM for this in India is closer to about 10 to 15,000 companies.
Now if we are able to provide them consistent experience to them in one particular city, then when they are looking for expansion in other city or other micro market, by default they end up choosing us rather than any other regional or any other player around. Because from a client perspective, also the B2B client perspective, they prefer working with, you know, at max two or three, you know, players who gets approved as a kind of a vendor and all.
So those are, that is, you know, so consistency in experience is one of the, you know, primary way we look at creating the brand. Apart from it, we on a very regular basis engage on various kind of, you know, B2B brand building as well as marketing activities. We are very active on relevant forums of commercial real estate around like Cornet and a couple of others. And we continue doing you know, a lot of B2B marketing and brand building activities to create impact for this relevant segment of customers.
Ashish Khurana
Okay, thank you for the elaborate answer. Second one, again with regards to competitive intensity on the supply side. So we target, you know, a certain profile of properties, a certain profile of landlords. And again, you know, since there are many players, you know, competing for, I mean, I mean you could say similar kind of in a similar kind of a micro market, you know, there can be only that much supply and we have this additional risk of, you know, filling the centers after we have kind of, you know, taken up the property. So would that mean that, you know, at a certain point we’ll face a supply constraint or we’ll have to, you know, move at the fringes of the micro market to keep growing or. I mean there’s something else which would be a workaround to that.
Sumit Lakhani
Yeah. So Ashish, just from a competition intensity perspective, if I can say, from 2018 onwards the sector had been fairly strongly competitive. The top five companies which you see within the sector had been fiercely competing since 2018 for both the chunk on demand and supply. We created our differentiation in terms of picking supply in a very different manner than most of the competition. One, we look at partnering with the landlord while it takes a bit more hard work and longer time but we think it creates long term value.
Second, if you look at the way we have worked is we look at more mid sized assets within the portfolio whereas a larger portion of most players look at more larger size assets. So this gives us a larger universe of available buildings in the key micro markets in India. And it sounds easier that a strategy that anyone can copy and bring about more focus on creating more assets and more centers by creating picking up mid size assets.
But on the back end it’s a very, you know, one needs to create a very large engine and a strong kind of processes to operate and run 200 plus centers to have simultaneously about 40 to 50 projects running around to have simultaneously engine which is driving a due diligence of almost about 25 to 30 different properties. So the execution capability is a kind of a very large moat which we have created and we think we have a great level of heads up with respect to competition in terms of following this strategy.
Now in terms of the overall supply availability as well. When we do our maths and we pick up the stock which is available for supply in the next one to two years. The target supply, especially of mid sized assets available for us in terms of the available supply plus the supply which is under construction in the micro markets which we need to be there is almost about 300 million plus square feet. So I don’t, at least we internally don’t have a kind of a challenge in terms of the availability of supply to be a hindrance for our growth around.
Ashish Khurana
And I mean the execution capability and I assume that, I mean the fair practices that you follow would probably, and your size would probably attract more and more landlords to you anyways. Right? So that should happen.
Sumit Lakhani
Yes, that’s. That’s correct. That’s correct.
Ashish Khurana
Okay, thank you so much for the answers. All the best. Thank you.
Operator
Thank you. Ladies and gentlemen, this was the last question for today’s conference call. I now hand the conference over to the management for their closing comments.
Amit Ramani
So with urbanization accelerating in India and the growth of global capability centers in the country and a thriving services sector, we strongly believe the best is yet to come for the co working space industry. The growth prospects are very promising and we remain highly optimistic about the future. We thank everyone for joining the call today. We hope we have been able to give you a detailed overview of our business and also answer your queries. Should you have further queries or clarifications, please feel free to reach out to sga, our investor relations advisors. Thank you.
Ravi Dugar
Thank you.
Operator
Thank you on behalf of SPARK Institutional Equities Private Limited. That concludes this conference. Thank you for joining us and you may now disconnect your lines.