Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Smartworks Coworking Spaces Ltd (NSE: SMARTWORKS) Q4 2026 Earnings Call dated Apr. 30, 2026
Corporate Participants:
Divakar Pingle — Investor Relations
Neetish Sarda — Managing Director
Harsh Binani — Executive Director
Anirudh Tapuriah — Chief of Strategy and Investor Relations
Analysts:
Girish Choudhary — Analyst
Mohit Agarwal — Analyst
Sourabh Gilda — Analyst
Shamit Ashar — Analyst
Presentation:
Operator
Ladies and Gentlemen, good day and welcome to the Smartworks Co Working Spaces Limited Q4FY26 earnings conference call. 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 this conference, please signal an operator by pressing Star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr.
Divakar Pingle from Eyir. Thank you and over to you sir.
Divakar Pingle — Investor Relations
Thank you Darwin Good afternoon to all of you. Welcome to the Q4 and full year FY26 earnings scholars Smartworks Co Working Spaces Limited to take us through the results today and to answer your questions we have the top management results represented by Matthew Sabler, Managing Director, Harsh Binani, Executive Director Sahid Jain, Chief Financial Officer Prateek Agarwal, Chief Business Officer and Anirudh Thapuria, Chief of Strategy and Investigations. We will start with opening remarks from the management post which we will open the floor for Q and A session.
Before we proceed, I would like to remind you that certain statements regarding score maybe forward looking in nature. These statements are subject to risks and uncertainties which are outlined in the presentation and that you can find on the website. I’d now like to hand over the call to Anish Sargar for his opening remarks over to an Ritesh.
Neetish Sarda — Managing Director
Good evening everyone and thank you for joining us for the quarter 4 FY26 earnings call of Smartworks Co Working Spaces Ltd. FY26 was our first full year as a listed company. Before I take you through the numbers, I want to frame what FY26 actually was for Smartworks because it produced three first evers in 12 months and together they tell the story. When we listed we made clear commitments to grow revenues at scale, expand margins consistently and improve returns and sustain strong operating cash flows.
We are pleased to say that in FY26 we have delivered on each of these and outpaced in several. Before going into the numbers, I want to frame the year simply first, in quarter four we crossed 10 million square foot of operational area making Smartworks the first listed flexible workspace platform in India to reach this milestone. We were the pioneers of managed campus platforms in India and we have built the platform in under seven years which includes two years of COVID Second, FY26 was our first full year of NDS pad profitability on top of continuous cash profitability on normalized basis for more than three years.
That is a meaningful inflection point and it happened in the same year. We grew operationally by 24% which has a meaningful impact on NDIS reported accounting profitability. Third, we crossed 5200 crores of contracted rental revenue. These are not pipeline, they are signed annuity like contracts with Fortune 500 global MNCs and large Indian conglomerates with average 10 years of over 44 months. Together this locks in 82.5% of our FY27 revenue, 3 milestones, 12 months on a clean balance sheet and on a base with very low quarter to quarter volatility, 90 plus percent enterprise revenue, multi year tenures and no asset liability mismatch through FY29.
The compounding phase is visible in every metric and going forward we will continue seeing improvement in these on a quarterly basis together. These milestones matter because they show that smartworks has moved from scaling square feet to compounding returns. There is clear inflection visible in all our metrics. Our model is no longer only about growth. It is about growth with profitability, growth with cash generation and growth with capital efficiency. The financial progress reflects this shift clearly.
Our revenues grew 31% year on year to almost 1800 crores. Our normalized EBITDA grew more than 75% to 314 crores. EBITDA margins expanded by 440 basis points to 17.5% and we ended the year net debt negative with 56 crores of net cash 21.6% Q4 annualized ROCE ROCE more than doubling on annual basis from 7.3% to 16%. We believe a better measure to evaluate the capital efficiency is through a new measure we have introduced operating ROIC. It expanded by 980 basis points year on year to 16.4% in FY26.
Viewed alongside ROCE, it underscores the durability and repeatability of returns as SmartWorks continues its compounding phase. Let me now step back from smartworks for a moment and explain the market context. The structural shift in India’s office market is accelerating. India’s office market delivered three consecutive record years of cross leasing. 83 million square foot absorbed in 25 quarter one of calendar 26 already clocked 22 million square foot of space, the highest first quarter on record.
The overall commercial real estate market continues to grow but flex is growing much faster. In calendar year five, India’s office stock grew by around 8% while the flex stock grew by 22%. In this, Smartworks grew faster than any of these at 24% in other words, Flex is outgrowing traditional commercial real estate and Smartworks is outgrowing flex. Today, Smartworks commands over 1% of India’s total commercial real estate stock and 10% of the flexible workspace market, establishing itself as the undisputed market leader significantly ahead of peers.
With our ability to scale the fastest and add 2 and a half to 3 million square foot every year, we believe incremental market share gain led with acceleration in the coming years and our intent is to double our market share. Industry data now shows Flex demand mirroring broader commercial real estate demand patterns. The strongest validation that Flex has gone mainstream. We are no longer a niche category riding on a trend. We are growing in step with the entire commercial real estate market and faster within it.
Sturdy, stable and structural. The strength of our demand and occupancy reflects four converging drivers. First, traditional enterprises are accelerating their move from conventional leases to flex. The most recent example being Hindalco who shifted into Smartworks facility in Pune. Second, GCCs continue to be a powerful tailwind. India is increasingly a strategic innovation hub, not just a delivery center. And this is translating into larger, longer, higher value mandates. GCC revenues exceed 15% of our rental revenue today.
We expect it to double over the next few years. Third, deal sizes are getting meaningfully larger. The 1000 plus seat cohort now contributes 37% of revenue up from 29% a year ago. This quarter alone a leading global financial institution signed a 3,000 seater campus with us and a big four consulting firm took over 2,000 seats. Fourth, expansion from existing clients has scaled within the same city or across cities. Multi city revenue is now 31% of our total revenue. Clear validation of the platform’s stickiness.
Our scale makes us anti fragile. Top 10 client concentration has halved from 39% to 20% over 7 years. Shocks in any single city sector or clients gets absorbed by the rest of the portfolio. On AI which is the question we are getting most often. We do not see it as a headwind, we see it as a tailwind. Offices are not a discretionary expense. They are essential infrastructure where companies build cultures, mentor talent, run R and D and and protect ip. As long as companies exist to build something, they will need a place to build it from.
Smartworks has always evolved with how enterprises work. AI is the next evolution and our enterprise first managed Grade A platform is built for exactly this shift. That brings me to supply which we believe is the single biggest moat in our industry. Grade A office demand has now outrun new supply for four consecutive years. The shortfall is projected to persist through 2030. In a market where supply is structurally constrained, securing uninterrupted access to grade A space is the motive. We have secured 100% of our FY27 supply and we have visibility to over 80% of the FY28 number.
This year we deepened partnership with leading institutional developers like Higanandani Panchil, Tata Realty and others. They are repeat partnerships, not just transactions. The size of our campus puts us in a unique position. Competition for full buildings, thousand plus seater take ups is very limited which earns us preferred terms with landlords for 10 years of up to 15 years. And our ability to win multiple thousand plus seater deals let us ramp up large new centers on the same timeline as smaller ones.
In our entire operating history we have surrendered just less than half a million square foot under 3% of our portfolio. That track record is rare in this industry and it is often one of the reasons landlords increasingly come to us First, I will now hand it over to Harsh to take you through the financials and operating operational performance in detail. Harsh over to you.
Harsh Binani — Executive Director
Thank you Nitish and good afternoon everyone. I will walk you through three areas. First, Q4 and FY26 financial performance. Second, the operating metric behind the numbers and third, our outlook for FY27. Let me begin with Q4. Q4 was the strongest quarter in SmartWorks history. Our revenue from operations stood at approximately 520 crores, up 45% year on year and 10% quarter on quarter. Our normalized EBITDA was approximately 99 crores, up 71% year on year with margin at 19%. With regards to exit in Q4, our normalized PBT stood at approximately 47 crores with a margin of 9%.
Normalized operating cash flow for Q4 was approximately 108 crores with OCF to EBITDA at 1.1x. It was a strategic call to accelerate supply acquisition for 28 and 29 and OCF has continued to trend upwards. In spite of this, our annualized ROCE for Q4 reached approximately 21.6% and annualized cash ROCE reached 49%. Most importantly, this was our second consecutive quarter of reported pat profitability in spite of the massive footprint expansion and FY26 was our first full year of reported PAT profitability.
Why does Q4 performance matter? It shows operating leverage becoming visible at scale as more centers mature. Incremental revenue converts disproportionately into EBITDA cash flow and returns on the Operational side we are today at 16.1 million square foot of footprint across 66 centers in 15 cities including Singapore with 10.1 million square foot operational already. Our mature campuses occupancy is steady at 89% and committed occupancy is at 93%. Both of these have held for several years now showing the robustness of the model.
This is what a stable entity like base looks like. Our Overall occupancy is 82%. It majorly reflects the addition of 1 million square foot of new operational area in Q4 which is ramping up very rapidly. The seat retention for FY26 is at 88% now. This is the core quality of SmartWorks revenue base, enterprise led, long tenured, multi city and increasingly diversified. Our concentration risk is also reduced meaningfully with the top 10 client concentration reducing by half from 39% in 19 to 20% in 26.
Our presentation has highlighted the revenue mix being more diversified across IT and technology, consulting and professional services, engineering and manufacturing, BFSI and others. A thousand plus seat cohort contributes 37%, up 2% from last quarter and this is 29% more year on year. Our average tenure continues to be on the higher end with more than 49 months and a lock in of more than 36 months and last year we had 38,000 seats net leased during the year with the limited supply that was available to sell and this is the trend and the trajectory we take forward with us in 27.
Our terms of trade remain the best in class with better days at 7 and negative working capital. Three points worth flagging on the financial trajectory. First, margin expansion is structural, this is not pricing led. EBITDA margin rose from 13% in 25 to 17.5% in 26, exiting Q4 at 19% driven by center maturity and operating leverage. Beyond payback, the same dynamics have more than doubled ROCE underscoring sustainability, improving capital productivity. Second, our ROCE expansion is also portfolio maturity led.
Our Cash ROCE for Q4 was the highest ever at 49% and we believe this measure is one of the most rigorous lengths for evaluating a recurring rental business at scale. In addition to ROIC which is a new metric which we’ve introduced. Third, our OCF to EBITDA has moved to 1.1 times and this was largely due to the strategic call that we took to secure supply for the subsequent years. We expect this number to continue stabilizing at 1.1 to 1.2 in the coming quarters. Given the visibility we now have, we are giving specific FY27 guidance.
Revenue growth of 28 to 30% anchored on the 82.5% already locked in for FY27 EBITDA margin of 19 to 20%, which is 200 to 300 basis points higher than our consolidated FY26 numbers and an operational square foot of 12.5 to 13 million square foot by March 27. Let us now close with final three lines. Smartworks is not a real estate company. We are an asset light platform which is an operating infrastructure that sits on real estate and serves some of the largest companies in India and the globe. We have transitioned from a scaling phase to a cash compounding phase.
Our Supply is secured, 82.5% revenues locked, and the portfolio is maturing in a way that will keep expanding both margins and returns. The compounding has begun. We expect it to accelerate in 2017. We do not manage for the quarter. We are building for the decade. Thank you for your continued trust. We are happy to take your questions.
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 and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Girish Chaudhary from Avendis Spark. Please go ahead.
Girish Choudhary
Yeah, thanks for the opportunity. Firstly, congratulations on a very strong performance. So my question on firstly on the footprint between, let’s say the gap between the operational and the total, which is around 6 million square feet, how should we think of phasing this in fiscal 27 and fiscal 28 and also the LOIs of 2.4 million square feet. When will this be in the fit out kind of a stage?
Neetish Sarda
Sure. So Girish, currently we have about 10.1 million square foot already operational. What you are seeing under fit out, which will come in the next few quarters, is going to be the next 1.1 million square foot which within the first and the next quarter of this year will become operational completely. The remaining 2.5 million, which is yet to be handed over, a portion of that covers for this year. So this year we’re targeting to end the year between 12.5 to 13 million square foot of operational footprint.
The remaining space that you’re seeing is buildings which Smartworks is committing for, which is beyond FY27. So FY27, if you look at our numbers it’s already secured with 10.1 million active, 1.1 million under constructions and 2.5 million which is yet to be handed over which is already secured. The 2.4 million that you see is term sheets and HODs that we’ve done for properties which are coming beyond FY27. And because they require certain timelines to be added right now, we should be able to conclude on those deals also within the next few quarters.
But the 16.1 million shows you that we have enough visibility on supply for the next two years.
Girish Choudhary
Got it, Got it. And in terms of how should we look at the seat additions in fiscal 26 you added around 38,000 seats basis your committed occupancy and also the new centers coming up. What would be a fair number in fiscal 27?
Neetish Sarda
So if you look at our projected numbers, we are looking at adding another 45 to 50,000 seats, you know, across the year. I think that should be a fair number to.
Girish Choudhary
That
Neetish Sarda
Should be a fair number to add this year.
Girish Choudhary
Sure. Next, I also observed that your the operating revenue grew significantly this quarter from 17 crores to 68 odd crores. So if you can just give us some light on what’s the split between I mean within the 68 crores and also the margin profile of this and a sustainable number for the fiscal 27
Anirudh Tapuriah
This side. Thank you for your question of the 68 crores. 34 crores comes from design and fit out services ancillary including revenue generated from our subsidiary which is STS that contributed the balance revenue figure of approximately 34 odd crores.
Neetish Sarda
So this, this is for the quarter. This
Anirudh Tapuriah
Is for the quarter and from a full year basis that total other revenue is 202 odd crores in revenue from operation of which design and fit out contributed 84 crores and ancillary plus revenue from STS contributed 189 odd crores.
Girish Choudhary
Got it. But
Harsh Binani
Like we mentioned for majority of the revenue continues to be annuity led which is enterprise, which is a more sustainable measure of how the business will continue to grow while the other operating revenue will accelerate. But of course it’s starting from a very small base.
Girish Choudhary
Yeah. My last question in terms of, I mean post the West Asia conflict we have seen significant inflation in various commodity costs, specifically the material costs. So in terms of fit out capex per seat, how are you seeing the inflation for whatever fit outs you’re doing right now? Is it anything incremental which we need to note of?
Neetish Sarda
We haven’t seen any incremental cost in the first quarter. With the volumes of business that we’re doing, any incremental cost which is even kicking in, we’re able to compensate that with the volume discounts that smartworks anyways gets with its preferred rates. Having said that, I think a 5% increase in the price of our fit out cost is something that we’ve already baked in and we should be in and around that number this year as well.
Harsh Binani
And Girish, largely a lot of our fit out items are not exposed to the West Asia commodity routes per se. And what we’ve also done in our additional disclosure this time is to articulate what has been our maintenance capex which is only pegged at 12 to 15% of the initial CapEx. And we’ve now completed two maintenance cycles across 6 million square foot without any cost pressure. And given the fact that majority of our operating cost items are reasonably predictable, right. In terms of rental and the scale net procurement advantages we get, we do not expect significant volatility going forward on this.
Girish Choudhary
Thank you and all the very best.
Harsh Binani
Thank you. Thank you.
Operator
Thank you. Our next question comes from the line of Mohit Agrawal from iifl. Please go ahead.
Mohit Agarwal
Yeah, thanks. And congratulations on a great set of numbers. My first question is on your margin guidance for the full year at 19, 20%. 19 to 20%. So considering that you will continue to grow at 2 and a half 3 million square feet for the next few years, is this the kind of number that we should be looking at, let’s say for the next two to three years, you know, 19 to 20% because you’ve seen a very steep increase in the last two years. But is this where the numbers would be stabilized? So some thoughts on that.
Harsh Binani
Thanks Mohit. Like we mentioned before, our margin expansion is structural, it’s not pricing led and it’s also largely because a lot of our portfolio has now matured. So going forward we expect that this is going to sustain in spite of the rapid growth largely driven by three drivers for 27. One is that the mature center mix will keep increasing. So incremental revenue from mature campuses beyond the break even, a large part of that will disproportionately flow to our ebitda. Second is, as you’ve seen, our corporate and our platform cost has remained flat and it’s now spread over a larger base.
So operating leverage is going to compound fairly meaningfully as a result of the footprint expansion. And finally, the 82.5% of 27 revenue which we mentioned is already locked in via signed contracts. The visibility gives us a lot of Headroom for further consolidation this year. So while we acknowledge that some of the new campuses do drag margin in the first six to nine months of ramp, but given that 100% of our supply is already secured and in our model you’ve seen we have a lot of pre fill, we believe ramp up is going to be faster, especially with the bigger deal sizes.
So therefore the margin should hold true to growth.
Mohit Agarwal
Okay, my second question is on the ROCE and the ROIC metric that you have given. So 16% is a big jump for the full year and 22% you’re reporting annualized for fourth quarter. How do you look at these metrics on a stabilized basis? So when you, let’s say bake in an occupancy of over 90% for a stabilized center, stabilized margins, what would be the ROCE for a stabilized portfolio? Theoretically, where would that be? I’m just trying to understand what is the room for the ROCE to improve from here on.
Harsh Binani
So Mohit, the roce being at 16% and the ROIC also converging to that shows a very close alignment in terms of how our returns are very operationally driven and not accounting driven. In our model, as the portfolio matures, the ROCE curve significantly increases and doubles from the levels that you see at a consolidated basis. The numbers at a consolidated basis of course reflect the fast growth and the ramp up that the company continues to do. So going forward, we meaningfully expect that there is headroom for the ROCE to continue growing as the portfolio matures.
And from that vantage point, we are reasonably confident on the numbers that we have forecasted. Anil this you would also like to.
Anirudh Tapuriah
Yes, thanks a lot Mohit for the question. And what we’re actually looking at is operating ROIC and ROCE is actually converging as far as our case is concerned. And the similar metric you will also see going forward as well. Just to put it into context, in Q4FY26, our operating ROIC was 22.1% and our analyzed ROC for the quarter was at 21.5%. So you should see a similar trend as we go forward.
Mohit Agarwal
Okay, but, but on a stabilized basis, this could actually double from the current levels. Is that understanding correct?
Anirudh Tapuriah
From stabilized basis? Yes. When the center matures, the mature portfolio continues to fire at a very, very quick pace. But at a blended level, you will actually see a mix of both mature and new coming into play.
Neetish Sarda
But with more mature centers coming in place. So once the maturity reaches 13 or 14 million square foot, then yes, these numbers will significantly improve because the new centers are the ones where the ROC pull is there. The older ones are contributing towards the higher roc.
Anirudh Tapuriah
And just to add to Nitri’s point as well, our mature footprint is at 8.9 million square feet for March 26 and for March 27 we are looking at 10.8 million square feet under mature footprint.
Mohit Agarwal
And sorry, can you share the ROIC or ROCE for a mature portfolio? Like do you share that number?
Neetish Sarda
We haven’t computed that number. We have a. And
Harsh Binani
We do not share that. Mohit, beyond these metrics we are not providing any additional point estimates. We just want to anchor on what we are going to continue delivering.
Mohit Agarwal
Sure, thank you. And one last question. You know the REITs and commercial landlords are, you know, in their operational numbers reporting a very steep increase in the rentals. You know some of the markets like Hyderabad and all, even Chennai markets are seeing very steep increase in rentals. Just trying to understand how you’re dealing with that. You know, is there a lag between let’s say when a landlord is escalating the rentals versus let’s say when you are able to pass on that to the or reprice the contracts with your customers.
So just your thoughts around the because we are really seeing an unprecedented kind of increase in the rentals for the last 12 months or so.
Neetish Sarda
Absolutely. And Mohit, for us SmartWorks strategy of acquisition is a little different. We’ve gone ahead and acquired properties for this year as well as taking up properties for the year after. We at any given point of time are negotiating for more than across more than 200 buildings. So for us we only get into assets where commercially it makes sense for us in terms of pricing. If you look at our EBITDA growth also it’s not a pricing led growth. Our contracts with our landlords are also long term as well as the current contract that we signed with our customers are also long term.
So there’s no immediate price change as such. But yes, once the building has gone through four to five years then there is a possibility for price revision that can come, that does come in from our side to our customers. But the landlords cannot revise their price obviously on the contract which is, which is more longer in duration to the tune of 15 to 20 years. So typically we are not seeing this price rise affect us immediately. There are certain micro markets where the price has gone significantly higher.
We are going ahead and negotiating at the price point at which we want to enter. And SmartWorks as a company is okay not to be present in all micro markets, we are only going ahead and looking at this as the best capital allocation. Wherever we feel we are getting the best returns for the money invested, that is where we are growing. So that’s why you will see our growth strategy also sort of translate with the centers where these centers are coming up.
Mohit Agarwal
Great. That was all from my side. Thanks a lot and all the best.
Neetish Sarda
Thank you.
Operator
Thank you. Our next question comes from the line of Yashas Gilganji from Bob Capital Markets Ltd. Please go ahead.
Mohit Agarwal
Good afternoon team. Thank you for taking I understand that the dip in overall occupancy was mostly because of the approximately 1 million square foot that was made operational over the quarter. And based on you having secured supply for the next two years or so, is it right to assume that smartworks is making speculative space additions? If you plan to lease approximately 1 million square foot from the landlords, how much of the space is pre filled? Like you were saying a while earlier before you go and sign the lease,
Neetish Sarda
So we have a visibility of about 20 to 25% of the space is what we have high visibility towards. Before we go ahead and commit to any of the assets that we take up, we’re now getting into a stage where we’re compounding with the number of customers who are coming with us, also committing to not only large sheets but also expanding with us in different locations. So 30% plus of our revenue comes from our existing customers. They are the ones who are informing us where else to go. So anytime SmartWorks goes ahead and commits to a new building, about 20 to 25% visibility is there even before we go ahead and commit to that asset.
And then on the lead up to the asset getting handed over to us, you’ll see these occupancy ramp up significantly. To your point on the occupancy ramp up, yes, we added a significant portion in February of this year, because of which you’ll see that there is a slight occupancy there. But if you look at the committed occupancy that we have reported, it still is at a very healthy level of about 88%. Which means that while there is a temporary dip this quarter because the centers are under fit out, they’ve only been handed over to us on the 1st of May.
But a significant portion of those centers are also pre committed even before we’re starting our fit outs. So that’s why our committed occupancy is still at a healthy level of about 88%. Hopefully that answers I would
Anirudh Tapuriah
Just like to add to one more point Which Nitish also mentioned. When you look at our mature capacity, our mature capacity, as of March 25, it stood at a 89% committed level. And on March 26 as well, despite mature footprint meaningfully increasing, it continues to stay at 89%.
Mohit Agarwal
Okay, yes, that answers my question. That’s clear. Now, looking at the least SPA of approximately 13.8 million square foot and leased centers of 61, is it fair to conclude that there is an uptick in the size of your average center? Is this conscious shift towards bigger centers or driven more by one off transactions?
Neetish Sarda
That is a conscious shift that SmartWorks as a company has been making for the last few years. We have constantly gone ahead and taken larger and larger centers to help us with our economies of scale and make sure that the price point at which we are able to deliver is fairly attractive. You know, if you, if we have to just call out a price point, today we are selling at about 8,000 rupees a seat on average across the country, which translates to less than 300 rupees per day for the customers. And this includes everything including tea, coffee, water, you know, the space, build out electricity, all of it is included in the pricing that we are sharing.
So our ability to take up such large centers, which is getting bigger and bigger as you’re mentioning and will keep getting bigger, helps us get economies of scale, reduce our cost and make sure that we are passing on some benefit to our customer, which makes us the best product there, which we’re able to get out at 8,000 rupees a seat. And you can refer to page
Harsh Binani
20 also of our presentation, which breaks down our supply by cohort size. So to Nitish’s point, the average campus size going up is clearly reflected in that cohort mix. This is on page 21. 20. Sorry, it’s on page 12.
Mohit Agarwal
All right, thank you again.
Operator
Thank you. Our next question comes from the line of Sourabh Gilda with GM Financial. Please go ahead.
Sourabh Gilda
Yeah, hi, am I audible?
Operator
Yeah, you are audible, sir.
Sourabh Gilda
Yeah. So congrats on the very strong set of numbers. So just to take the conversation from previous participants forward, so we have added almost 3 to 4 million square feet over FY22 to 24 which got operationalized. And these centers may see, you know, first cycle of renewals maybe when they complete for three, four year period over the next two years. So do you think this can be an additional growth lever for some, you know, next two years may not happen immediately for next one or two quarters, but can this be an additional growth lever for Some two years to.
Neetish Sarda
Absolutely. I think after two years, when markets which have seen price uptake already, there is an optionality for SmartWorks to go ahead and reprice on those markets. Specifically whether you know, where prices have gone up by almost 15, 20%, there is an opportunity for us to price up there as well. But SmartWorks as a strategy doesn’t just look at pricing as the only metrics. We also look at longevity of the client. You know, how many seats are they expanding in different locations and how is it as a true partnership, how are they growing with smartworks in between cities as well?
So keeping both of them in mind, you will obviously see, you know, high retention coming in place. You will see there is no zero, there is zero incremental capex. If a client ends up straight back with you keeping both of that in mind, yes, there will be a mark to market pricing that potentially can happen after maybe a few quarters and which can start happening after a few quarters. But I think with the existing numbers that we have, we are fairly confident of delivering the 19% numbers that we have forecasted towards.
Sourabh Gilda
Got it. So thanks. And secondly on the smart one case point, so it’s been six months since we launched and it was in a position to as a ready template for GCCs to come in and start operating within six to eight weeks. So any color, initial colors that you can give, maybe you know, the initial feedback or the take rate that we have been able to establish in this case.
Harsh Binani
No, certainly thanks for the question. As you will see, the SmartVantage program is already starting to gain meaningful traction. Some of the largest GCC deals that SmartBooks has done this year has happened on the back of a lot of the traction that this program has generated. And our GCC revenue which was at 15% is now already inched upwards to about 19% which is on the rental side alongside. We’ve also won two big mandates with regards to support services with our existing GCC clients. We expect that in the next financial year this is going to meaningfully start translating into bottom line gains as well.
For now, the bigger yardstick is for this to enable us to continue getting a lot of core annuity business while the other ancillary will also continue to accelerate and start
Neetish Sarda
And this can be reflected in our numbers. Also if you look at our GCC contribution, it’s almost doubled in the last year from 7% to 15%. And with more and more, you know, GCCs coming in, it’s not about just SmartVantage is not just helping us give Them other services but it’s also helping them on board and increase the footprint on the Space service through SmartWorks. So I think the total additional services might take a few more quarters for it to see significant realization. But the space take up has already doubled in years time within the first six, seven months itself.
Sourabh Gilda
Got it. So thanks. So just last question from my end on the competitive intensity side. So all the peers are aggressively expanding to 10 India to get a share in this DCC led demand and also in markets where you overlap like Pune, Hyderabad, Bangalore. So are you seeing any, you know, pricing pressure on new deals or maybe you know you can throw some color on the competitive dynamics how it is different from maybe DC led DCC led demand versus you know, standard enterprises.
Neetish Sarda
So if you look at our pricing where anyways one of the most competitive prices price product out there, we’re at least 10 to 15%, you know, more economical than most of our peers in the industry. And that is a moat that smartworks has been able to create with its large format campus platforms which no one else has been able to replicate to the size and tune at which we operate. So I think for us to price up, which we are not planning on doing and that’s why we’re seeing that margins at 19% is going to stabilize over at least for the next year.
We are not seeing any pricing pressure as such because the price point difference between our product and most of the other products are anyways 10 to 15% gap. Having said that, with the supply that we have locked in already and with the new supply that we are locking in, we are fairly confident that this gap will continuously increase in our favor.
Sourabh Gilda
So got it. Thank you and all the best for the hearing.
Neetish Sarda
Thank you.
Operator
Thank you. Our next question comes from the line of Vikrant Kashyap from Asian Market Securities. Please go ahead.
Mohit Agarwal
Good afternoon and congrats on a very strong set of number. My first question goes to your sourcing myths within the cities. In the last one year you have doubled your portfolio in Bangalore. Significantly fewer portfolio in Gurgaon and Noida. And on the high base you have still grown in Pune. But in the perspective of say two to five years, how the mix will ship up because Hyderabad is going very strongly with more of the demand coming from gcc. Your addition has been very low and to other cities.
So how is the mix improve in sales? Hyderabad, in other emerging cities within the country where the demands are coming.
Neetish Sarda
So for us growth is driven through where our clients are asking us to or our clients are pushing and asking us for more space. As I said earlier, we follow our customers. We today have a base of a very small base of only 780 customers and 30% of them choose to expand with SmartWorks across different locations. They are the ones which are driving our growth in different cities. I think not growing in certain parts are more strategic in nature. We are essentially at this point of time sourcing for more than 200 buildings across the country.
Wherever we feel we are getting the right price point, wherever the best capital deployment is in place, that is where we are expanding. It happened to be Bangalore and Gurgaon and Noida this quarter or this year. But if you would have looked at our numbers last year, Pune was was outshining most of the other players last year. So it is about deployment of capital. I don’t think there is a particular strategy. Yes, every city has a certain mark that we want to get to which some cities might get faster, some cities might take a little longer.
But strategically, wherever we get the best return on our capital employed, that is where we will go ahead and keep growing and where our customers drive us.
Harsh Binani
And Vikrant, to Nitish’s point, what is also clearly reflected in our numbers is a Pan India strategy paying us rich dividends because 30% of our revenue actually comes from multi city clients. So when you have that entire flavor of being a Pan India infrastructure partner, the learning cost that we’ve had to invest to get to this mark right for the distribution across all of these cities. Now we firmly believe that we are at a critical scale in each and every city. So whenever we add new capacity in any city it is going to be fairly margin accretive rather than us going and setting up new captives in a city.
Mohit Agarwal
Another question is on the IT related issues that also you highlighted in the opening remarks. But my question pertains to the new signups that are happening maybe in the last quarter or maybe ongoing quarters. How are the deals within the IT companies, domestic IP companies or international IP companies and the mix within the GCCs, how are they different one year back or maybe in the current scenario?
Harsh Binani
No, certainly Vikrant, if you look at slide 23 in our presentation we’ve clearly articulated where is the new demand coming from. What we can share with you as a flavor is wherever there is new hiring happening. Clearly smartworks is at that inflection point providing space for those new hiring. So that would particularly be GCCS Business Consulting, Engineering, Manufacturing and bfsi. What is hiding in this undercurrent is that in the Last two years, we’ve also seen a lot of traditional occupiers rolling over their contracts and moving to our setup.
So from that vantage point, given the wide diversity we have across sectors, we have a fairly good Runway ahead of us. And today, 77% of our net seats sold last year were from non IT ites. And GCC of course sits outside of that, which is where we also start to see a lot of promising opportunity ahead of us.
Mohit Agarwal
Okay, my last question was again on the supply side from the large institutional developers. So given the backdrop of price increases in certain micro market, they are also growing significantly. How are we placed in terms of sourcing food, say 28. Second part of 28 is going ahead. So are our share towards large developers? Are they increasing compared to your sourcing from SNI in family offices?
Neetish Sarda
So see, pricing is a function of of demand. Obviously with the size of properties that smartworks is looking at, what needs to be appreciated is that competition at that size is fairly limited. When we go ahead and negotiate for buildings ranging from 500 to 900,000 square foot, you don’t have a lot of takers who are coming and committing to that volume of buildings at one go. Most of the leasing in India happens at 30, 40, 50,000 square foot sizes. So floor by floor rentals from institution developers are seeing a steep increase.
But if you look at large demands coming from larger campuses built to suit campuses, that is not where you’re seeing a significant increase in pricing. And that is where smartworks is able to leverage its scale and make sure that we get competitive rentals compared to most of the others in the market. That’s a mode that we have not developed right now. This is something that we’ve demonstrated with multiple buildings of 500,000 plus which are already there with Smartworks across different locations.
65% of our buildings are non institutional are owned by non institutional landlords. But 35% now is from institutional landlords where we are also able to leverage our scale and get better preferential rental numbers.
Mohit Agarwal
Thank you for the clarity and wish you best of pleasure.
Neetish Sarda
Thank you.
Operator
Thank you. Our next question comes from the line of Shamit Ashal from Ambit Capital. Please go ahead.
Shamit Ashar
Yeah, hi. Thanks for the opportunity and congratulations on a good set of numbers. I wanted to know on the VAS revenue, so they grew this year relatively on a lower base. So what steps did you take to strengthen the VAS segment in particularly and how do you expect the VAS revenues to evolve going forward?
Neetish Sarda
So VAs for us both design as a service as well as the value added services or supplementary services that we give within our buildings. There are two parameters of growth on this. One parameter is because of the footprint growth automatically certain value added services like our gym facilities, outdoor gaming facilities and some of the other common facilities in the building start generating revenue with expansion of space. Automatically that will happen. Our focus on vast shifted only this year where we started going ahead and monetizing most of these assets within our buildings.
You will see these numbers with the footprint increase in the same proportion because those are minimum services which will be used by the users of the campus. Whoever comes in and uses the campus as far as design as a service is concerned, that vertical is a more is a much smaller vertical for us. It’s a choice where we’re only catering to customers who, you know, we’re not able to cater within a SmartWorks building just because of assets not being available in that same micro market. So it’s going to be more optional for SmartWorx to take up.
I don’t see that number significantly increasing over the next few years. I think it will be pretty much the same number that you see this year. But the value added services we think is going to scale up naturally 25 to 30% because of the increase in base and then because of our focus further scale up by another 10 to 15%. So 40 to 45% growth on these numbers should be fairly easy.
Shamit Ashar
Got it. And secondly, have you worked out what pricing growth were you able to realize during FY26?
Anirudh Tapuriah
Thanks, thanks Amit for that question. Yes, from a pricing growth perspective for a mature centers, our pricing stood at approximately 174 rupees on a per square feet basis which was 163 around in fiscal year 25.
Neetish Sarda
This translates to about a 5% growth which is what we have essentially contracted in in our agreements also.
Harsh Binani
But the good aspect that needs to be called out from this entire thing is that our growth last year was volume led and not as much pricing led and therefore without any pricing action. If our realizations continue to go up, this should disproportionately flow into EBITDA and this year’s margin expansion of 450bps. Right? 440bps was again without as much pricing action and therefore we see a lot of headroom for this on a go forward basis
Shamit Ashar
Converted. And last question, any ballpark number of on FY27’s capex
Neetish Sarda
But 3 million square foot would require us to do about 450ish crores of capex. The that will be required for the company’s expansion plan.
Anirudh Tapuriah
That’s the fresh capex.
Neetish Sarda
That’s the fresh capex that will be required.
Harsh Binani
And two nuances here. There is going to be also a need for us to incur maintenance. CapEx, which we clarified in our presentation as well, is a significantly smaller part of the outlay that we had communicated in the markets. And all of this CapEx funding, both in terms of my growth as well as a very small part for maintenance, is going to be self funded from the platform’s approvals itself. We will not need any further funding for this.
Shamit Ashar
Thank you. And all the best for the next quarters.
Harsh Binani
Thank you.
Operator
Thank you. The next question comes from the line of Utkarsh Somaya from ICO Quantum Solutions Private Limited. Please go ahead.
Mohit Agarwal
Thank you for the opportunity. Can you please give me the total demand and supply of Flex space in India in the quarter first quarter of calendar year 2026?
Harsh Binani
Just to clarify, you looking at this financial year or you referring to the previous financial year,
Mohit Agarwal
Calendar year, first three months of 2026.
Harsh Binani
Okay, understood. So the total office leasing stood at about 22 million square foot which was absorbed in Q1. This is the highest first quarter on record. Flex specifically from what we understand was in the range of about 22 to 23% of this and they emerged as the largest leasing segment for the first time, roughly about 5 million square foot or so in the quarter alone. And following this is gccs. And from a more macro perspective, Flex space of course last year crossed 100 million square foot and it has tripled since 2020.
So from. So that’s broadly the stance that we have.
Mohit Agarwal
So 5 million was the absorption in the first quarter. Right. And what is the supply?
Neetish Sarda
Supply available in the market would be. It’s difficult to count out the supply because of like supply is the entire leading of the market. Whatever new product is coming in. I don’t think we have that number.
Mohit Agarwal
Just one quick question. So I understand that today the total Flex stock is around 100 and it’s expected to go to 140 million by 2027. And we are seeing an upcycle because the demand each quarter is obviously surpassing the supply. So I’m just trying to understand those numbers to figure out where do we stand at the cycle. Because the moment the new supply starts increasing, I mean surpassing the demand, we will see operating deleverage eventually. So that I’m just trying to understand where we are in the cycle.
Neetish Sarda
I can maybe give you an idea about the industry and there’s A night franc report which came in which beautifully explains where the demand and supply is. The demand supply ratio in India typically used to be at 1 to 1.1 or 1.2 times. So if the demand was at 400, supply used to be at 110 to 120. Typically with this report you will see that Nitrank has projected that over the next few years, including this year, this demand is to supply ratio has gone down to 0.6 to 0.5, which means that not in flex generally across the market it is difficult.
No one has really taken out a report only on flex on this because flex is only a sub segment of the entire market. But the entire market is seeing a decrease in supply vis a vis the demand which is there. So the demand is for 80 million. The new supply coming in is only to the tune of 50 to 55 million.
Mohit Agarwal
And to provide some more color
Harsh Binani
On this, because this is a very important question that you’ve raised in our report as well we’ve mentioned and there are multiple estimates available, supply is not catching up before 2030. So industry data is fairly clear that you’re looking at a gap of between 5 to 25 mil, right. Annually persisting through the decade. But if we had to more directly look at the impact on flexibility, the two aspects that we want to call out clearly is that flex penetration is the story, it’s not the gap. So what was effectively 14% penetration today in India in more mature markets is significantly lower.
So we see that there is going to be in fact doubling of the flex segment in the coming years. And second is just also look at the flex demand. It is structurally enterprise led. Now. It’s not opportunistic, right. 70 to 80% of flex is with five year contracts. So companies who moved to flex as core portfolio strategy. In fact there were a couple of reports that more than 55 to 65% of the occupiers will have some part of their portfolio as flex. So it’s not cyclical. We believe it’s a habit change that has happened in the last few years.
And as long as this acceleration continues, flex will continue to benefit significantly from this demand supply mismatch. But more importantly, even if it catches up, the habit shift will ensure that the business of the penetration is still is very deep.
Mohit Agarwal
Understood. So in a nutshell, for the next till 2030, you don’t see black supply exceeding flex demand. You see the demand being far higher than the supply, right?
Neetish Sarda
Absolutely.
Mohit Agarwal
And one related question, this new, this demand that is coming is it coming from tenants which already occupy office space and are shifting to flexible office space, or these are tenants which are setting up new offices altogether and are opting for flexible.
Neetish Sarda
I think it’s a mix of both. About 7, 60, 70% of our demand comes from people who have already are shifting from traditional offices into flex. Then you have 20 to 25% demand coming in from customers who are now looking at setting up their first offices in India. Gcps, you know, companies who are looking at scaling up who weren’t of a significant scale but have scaled up significantly. I won’t consider them as moving there, but just scaling up their operations. So I think It’s a mix. 70% is actually from people who are leaving traditional offices and moving into flex.
Mohit Agarwal
So then it will be fair to say that before flex slows down, the office space will slow down first and flex will still have demand from the switch where people switch from offices to flex offices and thereafter the flex space will slow down. That’s. Is that a fair right? Okay. So the first
Neetish Sarda
Vacancies have to go up. Overall vacancies have to go up. Vacancies currently in the Indian market is one of the lowest that it’s ever been. So vacancies have to go up significantly for flex to be impacted.
Mohit Agarwal
Okay. And I just have one more question if you allow me. You as a management, where do you want, what do you track as a, you know, like a risk sign. But if this, something like this happens, we should like, we should be cautious and stop, stop increasing. Stop growing or reduce our supply or stop increasing supply. What do you look at internally as a risk metric?
Neetish Sarda
So three things. Number one, we, we first track, you know, the asset liability mismatch. Whereas where is the new supply coming in from? Where, when is the new supply coming in? If there is an oversupply in a certain micro market or a certain location, we try to factor that in into our decision making and try to stay away. There is a methodology of ranking each and every micro market in India. We have 27 relevant micro markets which are scaling significantly. And then there are a few which are now developing.
We track all of those micro markets. What is the supply which is coming in? The good part about commercial real estate is that product can’t come overnight. Any building that is coming over the next five years, we already have that data for that building. So the predictability on asset supply is very, very high. So we first track that. Then we also track micro market. What is the vacancy levels at, what are the rentals levels at? And There are other metrics before we go ahead and take expand into any location.
And that’s the reason you will not see us expand into every city in the same shape, manner and form. You know, we’re only going wherever we are seeing demand outpace the supply.
Mohit Agarwal
Noted. Thank you so much and good luck.
Neetish Sarda
Thank you.
Operator
Thank you. The next question is from the line of Priyanshapuram from Omega Portfolios Advisors. Please go ahead.
Mohit Agarwal
Yeah, hi. Congrats on the strong performance. I just wanted some operational figures. Could you give me the lease as a percentage of renters revenue for two particular cities this Pune and Mumbai?
Neetish Sarda
Sorry, can you repeat that question? Sorry, we lost you in the middle.
Mohit Agarwal
Sorry, am I audible properly?
Neetish Sarda
Yeah,
Mohit Agarwal
Yeah. Okay, so I wanted some operational figures. Lease as a percent of rental revenue for just two cities, Pune and Mumbai.
Anirudh Tapuriah
So thanks a lot for that question. When you look at our revenue from lease rentals in fiscal year 26, we generated a revenue of close to 1593 crores is what we have reported. Overall revenue from operations of 1796 crores. That is at a company level. And you want for a city level specifics as well, right?
Sourabh Gilda
Yes,
Anirudh Tapuriah
But city level specific revenue we do not report per se as far as the supply is concerned. We’ve actually reported what is our overall supply
Mohit Agarwal
Which
Neetish Sarda
Is there in
Anirudh Tapuriah
Investor presentation. That will give you a fair mix because we also continue to report our covented occupancy and actual end of period occupancy as well. So
Harsh Binani
One of the closest proxies you can use for the revenue estimation is essentially the square footage of course that needs to be adjusted for the rentals also in that specific market. And directionally Pune and Bombay together are close to about 40% of our current footprint. So that’s the best market for you.
Divakar Pingle
Okay. All right, understood. Thank you.
Operator
Thank you ladies and gentlemen. That was our last question. I would now like to hand the conference over to the management for closing comments. Over to you.
Harsh Binani
Thank you all for joining us today and for this engaging discussion. For a deeper view of our operating and financial performance, please do refer to our detailed shareholder letter. FY27 is set up to be a year of accelerated compounding and we look forward to delivering against the guidance we have laid out. Wishing you all a very good week evening and a good long weekend ahead. Thank you all.
Operator
Thank you on behalf of Smartworks Co Working Spaces Ltd. That concludes this conference. Thank you all for joining us. You may now disconnect your lines.