Smartworks Coworking Spaces Ltd — Q4 FY26

Smartworks Coworking Spaces Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=U5BZcKwvTcA Published: 13 days ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Smartworks Co-working Spaces Limited Q4 FY26 earnings conference call. 0:11 11 seconds As a reminder, all participant lines will be in the listenonly mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:20 20 seconds 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. 0:31 31 seconds I now hand the conference over to Mr. 0:33 33 seconds Diwakar Pinglay from EYIR. Thank you and over to you sir. 0:38 38 seconds Thank you Rob Doin. Uh good afternoon to all of you. Welcome to the Q4 and fully FI26 earning scholar smart works co-working 0:46 46 seconds spaces limited to take us through the results today and to answer your questions. We have the top management with us represented by Mitri Sabla 0:54 54 seconds managing director Ash Binani director, Sah Jane, chief financial officer, Ritik 1:02 1 minute, 2 seconds Reval, chief business officer and Aner Tapurya, chief of strategy and investations. 1:09 1 minute, 9 seconds We will start with opening remarks on the management post which we will open the floor for Q&A session. 1:15 1 minute, 15 seconds Before we proceed, I would like to remind you that certain statements speak during scope may be forward looking in nature. These statements are subject to 1:24 1 minute, 24 seconds risk and uncertainties which are outlined in the presentation and that you can find the website. 1:31 1 minute, 31 seconds I like to hand over the call to su for his opening remarks. Over to you. 1:37 1 minute, 37 seconds Good evening everyone and thank you for joining us for the quarter 4 FI26 earnings call of Smartworks Co-working 1:44 1 minute, 44 seconds Spaces Limited. [clears throat] FI26 was our first full year as a listed company. Before I take you through the 1:52 1 minute, 52 seconds numbers, I want to frame what FI26 actually was for Smartworks because it produced three first evers in 2:00 2 minutes 12 months and together they tell the story. When we listed, we made clear commitments to grow revenues at scale, 2:08 2 minutes, 8 seconds expand margins consistently, and improve returns and sustain strong operating cash flows. We are pleased to say that 2:17 2 minutes, 17 seconds in FI26, we've delivered on each of these and outpaced in several. 2:23 2 minutes, 23 seconds Before going into the numbers, I want to frame the year simply. 2:28 2 minutes, 28 seconds First in quarter 4 we crossed 10 million square foot of operational areas making smart works the first listed flexible 2:36 2 minutes, 36 seconds workspace platform in India to reach this milestone. We were the pioneers of managed campus platforms in India and we 2:44 2 minutes, 44 seconds have built the platform in under 7 years which includes 2 years of code. 2:51 2 minutes, 51 seconds Second, FI26 was our first full year of NDS pad profitability on top of 2:58 2 minutes, 58 seconds continuous cash profitability on normalized basis for more than 3 years. 3:04 3 minutes, 4 seconds That is a meaningful inflection point and it happened in the same year we grew operationally by 24%. 3:15 3 minutes, 15 seconds Which has a meaningful impact on NDS reported accounting profitability. 3:21 3 minutes, 21 seconds Third, we crossed 5,200 crores of contracted rental revenue. These are not 3:28 3 minutes, 28 seconds pipeline. They are signed annuity like contracts with Fortune 500, Pope 2000, global MNC's and large Indian 3:37 3 minutes, 37 seconds conglomerates with average tenurs of over 44 months. Together, this locks in 3:45 3 minutes, 45 seconds 82.5% of our FI27 revenue. 3:51 3 minutes, 51 seconds Three milestones 12 [clears throat] months on a clean balance sheet and on a base with very low quartertoquarter 3:59 3 minutes, 59 seconds volatility 90 plus% enterprise revenue multi-year tenurs and no asset liability mismatch 4:08 4 minutes, 8 seconds through FI29 the compounding phase is visible in every metric and going forward we will 4:15 4 minutes, 15 seconds continue seeing improvement in these on a quarterly basis. is together. These milestones 4:24 4 minutes, 24 seconds matter because they show that Smartworks has moved from scaling square feet to compounding returns. 4:32 4 minutes, 32 seconds There is clear inflection visible in all our metrics. Our model is no longer only about growth. It is about growth with 4:41 4 minutes, 41 seconds profitability, growth with cash generation and growth with capital efficiency. 4:48 4 minutes, 48 seconds The financial progress reflects this shift clearly. 4:53 4 minutes, 53 seconds Our revenues grew 31% yearonear to almost 1,800 crores. Our normalized IIDA 5:01 5 minutes, 1 second grew more than 75% to 314 crores. 5:07 5 minutes, 7 seconds IIDA margins expanded by 440 basis points to 17.5%. 5:15 5 minutes, 15 seconds And we ended the year net debt negative with 56 crores of next net cash 5:23 5 minutes, 23 seconds 21.6% Q4 annualized ROSI Rosi more than doubling on annual basis from 7.3% to 16%. 5:35 5 minutes, 35 seconds We believe a better measure to evaluate the capital efficiency is through a new measure we have introduced operating ROI. 5:45 5 minutes, 45 seconds It expanded by 980 basis points yearon year to 16.4% in FI26. 5:54 5 minutes, 54 seconds Viewed alongside ROSI, it underscores the durability and repeatability of returns as Smartworks continues its compounding phase. 6:06 6 minutes, 6 seconds Let me now step back from smart works for a moment and explain the market context. The structural shift in India's office market is accelerating. 6:15 6 minutes, 15 seconds India's office market delivered three consecutive record years of gross leasing. 83 million square foot absorbed 6:21 6 minutes, 21 seconds in 25. Quarter 1 of calendar year 26 already clocked 22 million square foot of space, the highest first quarter on record. 6:32 6 minutes, 32 seconds The overall commercial real estate market continues to grow but flex is growing much faster. 6:39 6 minutes, 39 seconds In calendar year five, India's office stock grew by around 8%. While the flex stock grew by 22%. 6:49 6 minutes, 49 seconds In this smartworks grew faster than any of these at 24%. 6:55 6 minutes, 55 seconds In other words, flex is outgrowing traditional commercial real estate and smartworks is out growing flex. 7:02 7 minutes, 2 seconds Today, Smartworks commands over 1% of India's total commercial real estate stock and 10% of the flexible workspace 7:11 7 minutes, 11 seconds market, establishing itself as the undisputed market leader significantly ahead of peers. 7:19 7 minutes, 19 seconds With our ability to scale the fastest and add 2 and a half to three million square foot every year, we believe 7:25 7 minutes, 25 seconds incremental market share gain led with acceleration in the coming years and our intent is to double our market share. 7:37 7 minutes, 37 seconds Industry data now shows flex demand mirroring broader commercial real estate demand patterns. the strongest 7:45 7 minutes, 45 seconds validation that flex has gone mainstream. 7:48 7 minutes, 48 seconds We are no longer a niche category riding on a trend. We are growing in step with the entire commercial real estate market 7:56 7 minutes, 56 seconds and faster within it. Sturdy, stable and structural. 8:03 8 minutes, 3 seconds The strength of our demand and occupancy reflects four converging drivers. First, traditional of enterprises are 8:11 8 minutes, 11 seconds accelerating their move from conventional leases to flex. The most recent example being Hindalo who shifted into smart works facility in Pune. 8:23 8 minutes, 23 seconds Second, GCCs continue to be a powerful tailwind. India is increasingly a 8:30 8 minutes, 30 seconds strategic innovation hub, not just a delivery center. And this is translating into larger, longer, higher value 8:38 8 minutes, 38 seconds mandates. GCC revenues exceed 15% of our rental revenue today. We expect it to 8:45 8 minutes, 45 seconds double over the next few years. Third, deal sizes are getting meaningfully larger. The thousand plus seat cohort 8:53 8 minutes, 53 seconds now contributes 37% of revenue, up from 29% a year ago. This quarter alone, a 9:00 9 minutes leading global financial institution signed a 3,000 seater campus with us and a big four consulting firm to over 2,000 seats. 9:11 9 minutes, 11 seconds Fourth, expansion from existing clients has scaled within the same city or across cities. Multi-ity revenue is now 9:20 9 minutes, 20 seconds 31% of our total revenue. Clear validation of the platform's stickiness. 9:28 9 minutes, 28 seconds Our scale makes us antifragile. 9:32 9 minutes, 32 seconds Top 10 client concentration has halfed from 39% to 20% over 7 years. 9:41 9 minutes, 41 seconds Shocks in any single city sector or clients gets absorbed by the rest of the portfolio 9:48 9 minutes, 48 seconds 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. 9:56 9 minutes, 56 seconds Offices are not a discretionary expense. 10:00 10 minutes These they are essential infrastructure where companies build cultures, mentor talent, run R&D and protect IP. As long 10:09 10 minutes, 9 seconds as companies exist to build something, they will need a place to build it from. 10:15 10 minutes, 15 seconds Smartworks has always evolved with how enterprises work. AI is the next evolution and our enterprise first 10:23 10 minutes, 23 seconds manage gradea platform is built for exactly this shift. 10:28 10 minutes, 28 seconds That brings me to supply which we believe is the single single biggest mode in our industry. Gradea office 10:36 10 minutes, 36 seconds demand has now outrun new supply for four consecutive years. The shortfall is project to persist through 2013. In a 10:45 10 minutes, 45 seconds market where supply is structurally constrained, securing uninterrupted access to grade space is the mode. We 10:52 10 minutes, 52 seconds have secured 100% of our FI27 supply and we have visibility to over 80% of the 11:00 11 minutes FI28 number. This year we deepened partnership with leading institutional developers like Higan Nandani, Panchil, 11:07 11 minutes, 7 seconds Tata Realy and others. They are repeat partnerships not just transactions. 11:14 11 minutes, 14 seconds The size of a campus puts us in a unique position. Competition for full buildings, thousand plus seater takeups 11:21 11 minutes, 21 seconds is very limited, which earns us preferred terms with landlords for tenurs of up to 15 years. And our ability to win multiple thousand plus 11:30 11 minutes, 30 seconds seater deals let us ramp up large new centers on the same timeline as smaller ones. In [clears throat] our entire 11:38 11 minutes, 38 seconds operating history, we have surrendered just less than half a million square foot under 3% of our portfolio. That 11:47 11 minutes, 47 seconds track record is rare in this industry and it is often one of the reasons landlord increasingly come to us first. 11:55 11 minutes, 55 seconds I will now hand it over to Hush to take you through the financials and operating operational performance in details. Hush, over to you. 12:08 12 minutes, 8 seconds Thank you Nish and good afternoon everyone. I will walk you through three areas. 12:14 12 minutes, 14 seconds First Q4 and FI26 financial performance. 12:19 12 minutes, 19 seconds Second the operating metric behind the numbers and third our outlook for FI27. 12:26 12 minutes, 26 seconds Let me begin with Q4. 12:28 12 minutes, 28 seconds Q4 was the strongest quarter in Smartworks history. 12:33 12 minutes, 33 seconds Our revenue from operations stood at approximately 520 crores up 45% yearonear and 10% quarter on quarter. 12:43 12 minutes, 43 seconds Our normalized AITA was approximately 99 crores up 71% yearonear with margin at 19% with regards to exit in Q4. 12:55 12 minutes, 55 seconds Our normalized PBT stood at approximately 47 crores with a margin of 9%. 13:01 13 minutes, 1 second Normalized operating cash flow for Q4 was approximately 108 crores with OCF to IITA at 1.1x. 13:10 13 minutes, 10 seconds It was a strategic call to accelerate supply acquisition for 28 and 29 and OCF has continued to trend upwards. 13:19 13 minutes, 19 seconds In spite of this, our annualized ROSI for Q4 reached approximately 21.6% 6% and annualized 13:28 13 minutes, 28 seconds cash roy reached 49%. 13:34 13 minutes, 34 seconds Most importantly, this was our second consecutive quarter of reported PAT profitability in spite of the massive 13:41 13 minutes, 41 seconds footprint expansion and FI26 was our first full year of reported PAT profitability. 13:52 13 minutes, 52 seconds Why does Q4 performance matter? 13:55 13 minutes, 55 seconds It shows operating leverage becoming visible at scale. As more centers mature, incremental revenue converts 14:03 14 minutes, 3 seconds disproportionately into IITA cash flow and returns. 14:10 14 minutes, 10 seconds On the operational side, we are today at 16.1 million square foot of footprint across 66 centers in 15 cities including 14:18 14 minutes, 18 seconds Singapore with 10.1 million square foot operational already. 14:24 14 minutes, 24 seconds Our mature campuses occupancy is steady at 89%. And committed occupancy is at 93%. 14:34 14 minutes, 34 seconds Both of these have held for several years now showing the robustness of the model. This is what a stable annity like base looks like. 14:46 14 minutes, 46 seconds Our overall occupancy is 82%. 14:49 14 minutes, 49 seconds It majorly reflects the addition of 1 million square foot of new operational area in Q4 uh which is ramping up very rapidly. 14:57 14 minutes, 57 seconds The seat retention for FI26 is at 88%. 15:03 15 minutes, 3 seconds Now this is the core quality of Smartworks revenue base enterpriseled long tenured multi-ity and increasingly diversified. 15:15 15 minutes, 15 seconds Our concentration risk has also reduced meaningfully with the top 10 client concentration reducing by half from 39% 15:23 15 minutes, 23 seconds in 19 to 20% in 26. 15:29 15 minutes, 29 seconds Our presentation has highlighted the revenue mix being more diversified across IT and technology, consulting and 15:36 15 minutes, 36 seconds professional services, engineering and manufacturing, BFSI and others. 15:43 15 minutes, 43 seconds A th00and plus seat cohort contributes 37% up 2% from last quarter and this is 29% more yearonear. 15:57 15 minutes, 57 seconds Our average tenure continues to be on the higher end with more than 49 months and a lockin of more than 36 months. 16:06 16 minutes, 6 seconds And last year we had 38,000 seats net leased during the year with the limited 16:14 16 minutes, 14 seconds supply that was available to sell. And this is the trend and the trajectory we take forward with us in 27. 16:21 16 minutes, 21 seconds Our terms of trade remain the best in class with better days at 7 and negative working capital. 16:30 16 minutes, 30 seconds Three points worth flagging on the financial trajectory. First margin expansion is structural. This is not 16:37 16 minutes, 37 seconds pricing. ITA margin rose from 13% in 25 to 17.5% in 26 exiting Q4 at 19% driven 16:47 16 minutes, 47 seconds by center maturity and operating leverage beyond payback. The same dynamics have more than doubled ROSI 16:54 16 minutes, 54 seconds underscoring sustainably improving capital productivity. 16:59 16 minutes, 59 seconds Second, our ROSI expansion is also portfolio maturity led. Our cash roy for Q4 was the highest ever at 49%. And we 17:09 17 minutes, 9 seconds believe this measure is one of the most rigorous lens for evaluating a recurring rental business at scale in addition to 17:16 17 minutes, 16 seconds ROI which is a new metric which we've introduced. 17:20 17 minutes, 20 seconds Third, our OCF TOITA has moved to 1.1 times and this was largely due to the strategic call that we took to secure 17:30 17 minutes, 30 seconds supply for the subsequent years. We expect this number to continue stabilizing at 1.1 to 1.2 in the coming quarters. 17:40 17 minutes, 40 seconds Given the visibility we now have, we are giving specific FI27 guidance. 17:47 17 minutes, 47 seconds revenue growth of 28 to 30% anchored on the 82.5% already locked in for FI27. 17:55 17 minutes, 55 seconds IITA margin of 19 to 20% which is 200 to 300 basis points higher than our 18:03 18 minutes, 3 seconds consolidated FI26 numbers and an operational square foot of 12.5 to 13 million square ft by March 27. 18:16 18 minutes, 16 seconds Let us now close with final three lines. Smartworks is not a real estate company. 18:22 18 minutes, 22 seconds We are an asset light platform which is an operating infrastructure that sits on real estate and serves some of the 18:30 18 minutes, 30 seconds largest companies in India and the globe. 18:33 18 minutes, 33 seconds We have transitioned from a scaling phase to a cash compounding phase. Our supply is secured. 82.5% revenues locked 18:42 18 minutes, 42 seconds and the portfolio is maturing in a way that will keep expanding both margins and returns. 18:48 18 minutes, 48 seconds The compounding has begun. We expect it to accelerate in 27. We do not manage for the quarter. We are building for the 18:57 18 minutes, 57 seconds decade. Thank you for your continued trust. We are happy to take your questions. Thank you very much. Thank you very much. 19:05 19 minutes, 5 seconds We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish 19:14 19 minutes, 14 seconds to remove yourself from the question queue, you may press star and two. 19:19 19 minutes, 19 seconds 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. 19:30 19 minutes, 30 seconds Our first question comes from the line of Girish Chri from Wendis Spark. Please go ahead. 19:36 19 minutes, 36 seconds Yeah. Uh thanks for the opportunity. Uh firstly congratulations on a very strong performance. 19:42 19 minutes, 42 seconds Uh so my question uh on uh firstly on the footprint [clears throat] uh between 19:50 19 minutes, 50 seconds let's say the the gap between the operational and the total which is around 6 million square ft. Um how should we think of phasing this in 19:59 19 minutes, 59 seconds fiscal 27 and fiscal 28 and also the lois of 2.4 million square ft. when when when will this be in the fit out uh kind of a stage? 20:12 20 minutes, 12 seconds Sure. Uh so Girish, currently we have about 10.1 million square foot already operational. Uh what you are seeing under fit out which will come in the 20:20 20 minutes, 20 seconds next few quarters is going to be the next 1.1 million square foot which uh within the first and the next quarter of 20:28 20 minutes, 28 seconds this year will become operational completely. The remaining 2.5 million which is yet to be handed over a portion 20:35 20 minutes, 35 seconds 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 20:44 20 minutes, 44 seconds space that you're seeing is buildings which smartworks is committing for which is beyond uh FI27. 20:51 20 minutes, 51 seconds Uh so FI27 if you look at our numbers it's already secured with 10.1 million active 1.1 million under constructions 20:59 20 minutes, 59 seconds and 2.5 million which is yet to be handed over which is already secured. 21:03 21 minutes, 3 seconds The 2.4 million that you see is term sheets and hots that we've done for properties which are coming beyond FI27. 21:11 21 minutes, 11 seconds Um 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. 21:20 21 minutes, 20 seconds But the 16.1 million shows you that we have enough visibility on supply for the next two years. 21:27 21 minutes, 27 seconds Got it. Got it. And uh in terms of how should we look at the seat additions uh in in fiscal 26 you added around 38,000 21:35 21 minutes, 35 seconds seats um basis your committed occupancy and and also the new centers coming up. What would be a fair number uh in in fiscal 27? 21:46 21 minutes, 46 seconds So if you look at our projected numbers, we are looking at adding another 45 to 50,000 seats u you know across the year. 21:54 21 minutes, 54 seconds Uh I think that should be a fair number to that should be a fair number to add this year. 22:04 22 minutes, 4 seconds Sure. Sure. Uh next uh I also observed that your uh um the operating revenue 22:11 22 minutes, 11 seconds grew significantly this quarter uh from 17 crores to 68 odd crores. So if you can just give us some uh um light on 22:20 22 minutes, 20 seconds what's the split uh between uh uh I mean with within the 68 crores and uh also the margin profile of this and a sustainable number for fiscal 27. 22:32 22 minutes, 32 seconds Hey, hi Greer. 22:34 22 minutes, 34 seconds Thank you for your question. Of the 68 crores, 34 crores comes from design and fit out services ancillary including a 22:41 22 minutes, 41 seconds revenue generated from our subsidiary which is STS that contributed the balance uh revenue figure of approximately 34 odd crores. 22:51 22 minutes, 51 seconds So this this is for the quarter. This is for the quarter and from a full year basis um that to total other revenue is 22:58 22 minutes, 58 seconds 202 odd crores in revenue from operation of which design and fit out contributed 84 crores and ancillary plus revenue from STS contributed 118 odd crores. 23:10 23 minutes, 10 seconds Got it. 23:12 23 minutes, 12 seconds And uh but we mentioned before majority of the revenue continues to be annityled which is enterprise which is a more 23:20 23 minutes, 20 seconds 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. 23:30 23 minutes, 30 seconds Okay. Uh yeah and then yeah my last question uh uh uh in in 23:38 23 minutes, 38 seconds terms of uh uh I mean post the uh the uh West Asia conflict we have seen significant uh inflation in various 23:45 23 minutes, 45 seconds commodity costs specifically the material costs so in terms of fit out capeex per seat how are you seeing the inflation for for whatever fit outs 23:54 23 minutes, 54 seconds you're doing right now um uh is is is it [clears throat] anything incremental which we need to note 24:01 24 minutes, 1 second We haven't seen any incremental cost in the first quarter. Uh with the volumes of business that we're doing, any incremental cost which is even kicking 24:08 24 minutes, 8 seconds in, we're able to uh compensate that with the volume discounts that Smartworks anyways gets with its preferred rates. Uh having said that, I 24:17 24 minutes, 17 seconds think a 5% in uh increase in the price u of our fit out cost is something that we've already baked in and we should be 24:26 24 minutes, 26 seconds in and around that number uh this year as well. 24:29 24 minutes, 29 seconds 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 24:37 24 minutes, 37 seconds also done in our additional disclosure this time is to articulate what has been our maintenance capex which is only 24:45 24 minutes, 45 seconds pegged at 12 to 15% of the initial capex and we've now completed two maintenance cycles across 6 million square foot 24:53 24 minutes, 53 seconds without any cost pressure and given the fact that majority of our operating cost items are reasonably predictable, right? 25:00 25 minutes In terms of rental and the scale procurement advantages we get, we do not expect significant volatility going forward on this. 25:12 25 minutes, 12 seconds Thank you and all the very best. Thank you. Thank you. 25:17 25 minutes, 17 seconds Thank you. Our next question comes from the line of Mohit Araal from IFL. Please go ahead. 25:24 25 minutes, 24 seconds Yeah, thanks and uh congratulations on a great set of numbers. Uh my first question is on your margin guidance for 25:32 25 minutes, 32 seconds the full year at 19 20%. 19 to 20%. Uh so considering that you'll continue to grow at 2 and a half 3 million square ft 25:40 25 minutes, 40 seconds for the next few years. uh is this the kind of number that we should be looking at uh let's say for the next 2 to 3 25:47 25 minutes, 47 seconds years uh uh you know 19 to 20% because you've seen a very steep increase in the last 2 years uh but is this where the 25:54 25 minutes, 54 seconds numbers would be stabilized so some thoughts on that no thanks Mo uh like we mentioned before 26:02 26 minutes, 2 seconds our margin expansion is structural it's not pricing and it's also largely because a lot of our portfolio has now 26:10 26 minutes, 10 seconds 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. 26:21 26 minutes, 21 seconds 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 26:30 26 minutes, 30 seconds disproportionately flow to our second is as you have seen our corporate and our platform cost has remained flat and it's now spread over a larger base. 26:40 26 minutes, 40 seconds So operating leverage is going to compound fairly meaningfully as a result of the footprint expansion. Um and 26:47 26 minutes, 47 seconds finally the 82.5% of 27 revenue which we mentioned is already locked in via signed contracts. So visibility gives us 26:54 26 minutes, 54 seconds a lot of headroom for uh further consolidation this year. So while we acknowledge that some of the new campuses do drag margin in their first 6 27:04 27 minutes, 4 seconds to9 months of ramp but given that 100% of our supply is already secured and in 27:10 27 minutes, 10 seconds our model you've seen we have a lot of prefill we believe ramp up is going to be faster especially with the bigger 27:17 27 minutes, 17 seconds deal sizes. So therefore the margin should hold through the growth. 27:24 27 minutes, 24 seconds Okay. Uh fine. My second question is on the uh ROSI and the ROIC metric that you have given. Uh so 16% is a big jump uh 27:34 27 minutes, 34 seconds for the full year and 22% you're uh reporting annualized for fourth quarter. 27:38 27 minutes, 38 seconds Uh how do you look at these metrics on a stabilized basis? So when you let's say in an occupancy of over 90% for a 27:46 27 minutes, 46 seconds stabilized center stabilized margins uh what would be the uh Rosi for a stabilized portfolio theoretically where would that be? I'm just trying to 27:55 27 minutes, 55 seconds understand what is the room for the ROSI to improve from here on. 28:02 28 minutes, 2 seconds So Mohit the Rosi being at 16% and the ROI also converging to that shows a very 28:08 28 minutes, 8 seconds close alignment in terms of how our returns are very operationally driven and not accounting driven. Um in our model 28:17 28 minutes, 17 seconds as the portfolio matures uh the ROSI curve significantly increases uh and doubles from the levels that you see at 28:26 28 minutes, 26 seconds 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 28:34 28 minutes, 34 seconds forward uh we meaningfully expect that there is headroom for the ROSI to continue growing as the portfolio matures 28:42 28 minutes, 42 seconds and from that vantage point uh we are reasonably confident on the numbers that uh we have forecasted. uh Anil if you would also like to uh 28:51 28 minutes, 51 seconds yes thanks a lot Mo for the question and what you're actually looking at is operating royic and ROC is actually converging as far as our case is 28:58 28 minutes, 58 seconds concerned and the similar metric you will also see going forward as well just to put it into context in Q4 FI26 our operating roy was 22.1%. 29:08 29 minutes, 8 seconds And our analyzed ROC for the quarter was at 21.5%. So you should see a similar trend as we go forward. 29:16 29 minutes, 16 seconds Okay. But but on a stabilized basis, this could actually double from the current levels. Is that understanding correct? 29:24 29 minutes, 24 seconds From a stabilized basis, yes. When the center matures, the mature portfolio continues to fire at a very very quick 29:32 29 minutes, 32 seconds pace. But at a blended level, you will actually see a mix of both mature and new coming into play. But with more mature centers coming in play, so once 29:40 29 minutes, 40 seconds the maturity reaches 13 or 14 million square foot, then yes, these number will significantly improve because the new centers are the ones where the Rosie 29:48 29 minutes, 48 seconds pool is there. The older ones are contributing towards the higher ROSI. 29:52 29 minutes, 52 seconds And just to add just to add to Nit's point as well, our mature footprint is at 8.9 million ft² for March 26 and for March 27, we are looking at 10.8 million square ft under mature footprint. 30:04 30 minutes, 4 seconds And sorry can you share the uh ROIC or ROSI for a mature portfolio like do you share that number? 30:14 30 minutes, 14 seconds We haven't computed that number. Uh we have a and we do not share that Mohish. Uh beyond these metrics we are not providing any additional point 30:22 30 minutes, 22 seconds estimates. We just want to anchor on what we are going to continue delivering. 30:27 30 minutes, 27 seconds Yeah sure. Thank you. And one last question uh you know uh the REITs and commercial uh landlords are you know in their 30:35 30 minutes, 35 seconds operational numbers reporting a very steep increase in the rentals you know some of the markets like Hyderabad and 30:42 30 minutes, 42 seconds all even Chennai markets are seeing very steep increases in rentals uh uh just trying to understand how you're dealing with that uh you know is there a lag 30:51 30 minutes, 51 seconds between let's say when a land landlord is escalating uh the rentals versus let's say when you are able to uh pass on that to the uh or repric the 30:59 30 minutes, 59 seconds contracts with your customers. So just your thoughts around because we are really seeing an unprecedented kind of increase in the uh rentals for the last 31:07 31 minutes, 7 seconds uh 12 months or so. No absolutely and Mohit for us Smartworks strategy of acquisition is a little different. We've gone ahead and acquired 31:16 31 minutes, 16 seconds properties for this for this year as well as uh you know taking up properties for the year after. Uh we at any given 31:23 31 minutes, 23 seconds 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 31:32 31 minutes, 32 seconds terms of pricing if you look at our notida growth also it's not a pricing growth. Our contracts with our landlords are also long-term as well as the 31:41 31 minutes, 41 seconds contracts 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 31:49 31 minutes, 49 seconds four to 5 years then there is an possibility for price revision that can come that does come in uh from our side to our customers. But the landlords 31:57 31 minutes, 57 seconds cannot revise their price obviously on the contract which is uh which is more longer in duration to the tune of 15 to 32:04 32 minutes, 4 seconds 20 years. So typically we are not seeing this price rise affect us immediately. 32:09 32 minutes, 9 seconds There are certain micro markets where the price is gone significantly higher. 32:14 32 minutes, 14 seconds We are going ahead and uh you know negotiating at the price point at which we want to enter and smartworks as a company is okay not to be present in all 32:21 32 minutes, 21 seconds 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. 32:31 32 minutes, 31 seconds So that's why you'll see our growth strategy also sort of translate with with the centers where where these centers are coming up. 32:42 32 minutes, 42 seconds Great. Uh that was all from my side. Thanks a lot and all the best. Thank you. 32:49 32 minutes, 49 seconds Thank you. Our next question comes from the line of Yashas Gilganchi from BB Capital Markets Limited. Please go ahead. 32:59 32 minutes, 59 seconds Good afternoon team. Thank you for taking the call. 33:03 33 minutes, 3 seconds 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 33:12 33 minutes, 12 seconds and based on uh you having secure supply for the next uh two years or so. Is it tried to assume that Smartworks is 33:19 33 minutes, 19 seconds making speculative space additions? Say if you plan to lease approximately 1 million square foot from the landlords, 33:26 33 minutes, 26 seconds how much of the space is pre-filled like you were saying a while earlier before you go and sign the CV? 33:34 33 minutes, 34 seconds So we have a visibility of about 20 to 25% of the space is what we have uh high visibility towards before we go ahead 33:43 33 minutes, 43 seconds and commit to any of the assets that we take up. uh we're now getting into a stage where we're compounding uh with the number of customers who are coming 33:51 33 minutes, 51 seconds with us also committing to not only large fields but also expanding with us in different locations. So 30% plus of our revenue comes from our existing 33:59 33 minutes, 59 seconds customers. They are the ones who are informing us where else to go. Uh so anytime smartworks goes ahead and commits to a new building about 20 to 34:08 34 minutes, 8 seconds 25% visibility is there even before we go ahead and commit to that asset. And then on the leadup to the asset getting 34:16 34 minutes, 16 seconds handed over to us, you'll see these occupancy ramp up significantly. To your point on the occupancy ramp up, uh yes, 34:23 34 minutes, 23 seconds we added a a significant portion in February of this year because of which you'll see that there is a slight occupancy dip. But if you look at the 34:31 34 minutes, 31 seconds 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 34:39 34 minutes, 39 seconds 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 34:47 34 minutes, 47 seconds pre-committed uh even before u you know we're we're starting our uh fit outs so that's why our committed occupancy is still at a healthy level of about 88%. 34:59 34 minutes, 59 seconds Hopefully that answers I would just like to add to one more point which Nikki also mentioned when you look at our mature capacity our mature capacity as 35:07 35 minutes, 7 seconds of March 25 it stood at a 89% committed level and on March 26 26 as well despite 35:15 35 minutes, 15 seconds mature footprint meaningfully increasing it continues to stay at 89%. 35:22 35 minutes, 22 seconds Okay yes that answers my question uh that's clear. Now looking at the least spa of approximately 13.8 uh millions 35:30 35 minutes, 30 seconds per square foot and least centers of 61 is it fair to conclude that there is an uptick in the size of your average center? Is this a conscious shift 35:39 35 minutes, 39 seconds towards uh bigger centers or driven more by one-off transactions? 35:46 35 minutes, 46 seconds That is a conscious shift that Smartworks as a company has been making for the last few years. We've constantly gone ahead and taken larger and larger 35:53 35 minutes, 53 seconds centers to help us with our economies of scale and make sure that the price point at which we are able to deliver is is 36:00 36 minutes fairly attractive. uh you know if you if we have to just call out a price point today we are selling at at about 8,000 rupees a seat on average across the 36:08 36 minutes, 8 seconds country which translates to less than 300 rupees uh per day for the customers and this includes everything including tea coffee water you know the space 36:18 36 minutes, 18 seconds buildout 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 36:27 36 minutes, 27 seconds and bigger as you're mentioning and will keep getting bigger um helps us get economy of scale reduce our cost and make sure that we are uh passing on some 36:35 36 minutes, 35 seconds benefit to our customer which makes us the best uh you know product there which we are able to get out at 8,000 rupees a 36:44 36 minutes, 44 seconds seat and you can refer to page 20 also of our presentation which breaks down our supply by cohort size so to Nisha's 36:52 36 minutes, 52 seconds point uh the average campus size going up is clearly reflected in that cohort mix 36:59 36 minutes, 59 seconds on page 21 20 20. Sorry, it's on page 20. 37:06 37 minutes, 6 seconds All right. Thank you again. Thank you. 37:12 37 minutes, 12 seconds Our next question comes from the line of Sorup Gilda with GM Financial. Please go ahead. 37:19 37 minutes, 19 seconds Yeah. Hi, I'm audible. 37:22 37 minutes, 22 seconds Yes, you are audible, sir. 37:23 37 minutes, 23 seconds 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 37:32 37 minutes, 32 seconds million square ft² cover FI 22 to 24 uh which got operationalized and these centers may see you know uh first cycle 37:42 37 minutes, 42 seconds of renewals maybe when they complete for 3 4 year period over the next two years. 37:46 37 minutes, 46 seconds So do you think this can be an additional growth lever for uh from you know next two years may not happen immediately for next one or two quarters 37:54 37 minutes, 54 seconds but uh can this be an additional growth for from 2 years to say absolutely I think after 2 years when 38:03 38 minutes, 3 seconds markets which have seen price uptake already there is an optionality for smart works to go ahead and repric on those markets specifically where the uh 38:11 38 minutes, 11 seconds 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 uh as the only metrics. 38:23 38 minutes, 23 seconds We also look at longevity of the client u you know how many seats are they expanding in different locations and how 38:30 38 minutes, 30 seconds is it as a true partnership how are they growing with smart works in different cities as well. So keeping both of them in mind uh you will obviously see uh you 38:39 38 minutes, 39 seconds know high retention coming in place uh you will see there is no zero if there is zero incremental capex if a client ends up stake back with you. uh keeping 38:48 38 minutes, 48 seconds both of that in mind yes there will be a marktomarket pricing that potentially can happen after maybe a few quarters uh 38:56 38 minutes, 56 seconds and which can start happening after the few quarters but I think with the existing numbers that we have we are fairly confident of delivering the 19% 39:04 39 minutes, 4 seconds uh numbers that we have uh you know forecasted towards Got it so thanks and uh uh secondly on 39:13 39 minutes, 13 seconds the smart vantage point so it's been 6 months since we launched and it was you know position to whether a ready template for GCCs to come in and you 39:21 39 minutes, 21 seconds know start operating within 6 to 8 weeks. So any color initial colors that you can give maybe you know the initial feedback or the cake rate that we have been able to establish in this. 39:32 39 minutes, 32 seconds No certainly thanks for the question. Uh as you will see the smart vantage program is already starting to gain 39:39 39 minutes, 39 seconds meaningful traction. uh some of the largest GCC deals that Smartbox has done this year uh has happened on the back of 39:47 39 minutes, 47 seconds a lot of the uh traction that this program has generated. Um and our GCC revenue which was at 15% has now already 39:55 39 minutes, 55 seconds inched upwards to about 19% uh which is on the rental side. Alongside we've also 40:02 40 minutes, 2 seconds won two big mandates with regards to support services with our existing GCC clients. We expect that in the next 40:10 40 minutes, 10 seconds financial year this is going to meaningfully start translating into uh bottom line gains as well. For now the 40:18 40 minutes, 18 seconds bigger yard stick is for this to enable us to continue getting a lot of core annity business while the other ancillary will also continue to 40:26 40 minutes, 26 seconds accelerate and start and this can be reflected in our numbers also. If you look at our uh GCC contributions it's almost doubled in the 40:34 40 minutes, 34 seconds last year from 7% to 15%. And with more and more uh you know GCC is coming in uh it's not about just smart vantage is not 40:43 40 minutes, 43 seconds just helping us give them other services but is also helping them on board and increase the footprint on the space service through smart works. So I think 40:52 40 minutes, 52 seconds the total additional services might take a a few more quarters for it to see significant realization but the space 41:00 41 minutes take up has already uh doubled in you know years time within the first 6 7 months itself. 41:08 41 minutes, 8 seconds Got it. Sure. Thanks. So just last question from uh my on the competitive intensity side. So you know all the uh 41:15 41 minutes, 15 seconds your peers are you know aggressively expanding to you know uh to get a share in this BCC demand and also in markets 41:23 41 minutes, 23 seconds where you overlap like Pune, Hyderabad, Bangalore. So are you seeing any you know uh pricing pressure on new deals or maybe you know if you can throw some 41:31 41 minutes, 31 seconds color in the competitive dynamics how it is different from maybe GC like GCC like demand versus you know standard enterprise. 41:40 41 minutes, 40 seconds So so if you look at our pricing we're anyways one of the most competitive price uh price product out there. uh 41:48 41 minutes, 48 seconds we're at least 10 to 15% uh you know more economical than most of our peers uh in the industry and that is a mode 41:55 41 minutes, 55 seconds 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 unit which we 42:04 42 minutes, 4 seconds operate. So I I think for us to price up which we are not planning on doing and that's why we're saying that margins at 42:12 42 minutes, 12 seconds 19% is going to stabilize over uh at least for the next year. Uh we are not seeing any pricing pressure as such 42:20 42 minutes, 20 seconds because the price point difference between our product and most of the other products are anyways uh 10 to 15% uh gap. Uh having said that with the 42:29 42 minutes, 29 seconds supply that we have locked in already and with the new supply that we are locking in we are fairly confident that 42:36 42 minutes, 36 seconds this gap will continuously increase uh in our favor. 42:42 42 minutes, 42 seconds Sure. Got it. Thank you and all the best for the Thank you. 42:49 42 minutes, 49 seconds Thank you. Our next question comes from the line of Vikrant Kashab from Asian Market Securities. Please go ahead. 42:57 42 minutes, 57 seconds Hi, good afternoon and congrats on a very strong set of number. U my first question goes to your uh sourcing mix 43:05 43 minutes, 5 seconds within the cities. Even in the last one year you have doubled your portfolio in Bangalore significantly g your portfolio 43:12 43 minutes, 12 seconds in Pura and on the high base you have still grown in Pune but in the for say 43:20 43 minutes, 20 seconds two to five years. how the mix will solve because Hyderabad is going very strongly with more of the demand coming from GCC. Your addition has been very 43:29 43 minutes, 29 seconds low and to other cities. So how is the mix improving Hyderabad, Chai in other emerging cities within within this country where the demands are coming. 43:41 43 minutes, 41 seconds So, so for us growth is driven through where our clients are asking us to uh or our clients are pushing and asking us 43:48 43 minutes, 48 seconds for more spaces. Uh as I said earlier uh we follow our customers. We today have a base of a very small base of only 780 43:55 43 minutes, 55 seconds customers. Uh and 30% of them uh you know choose to expand with smartworks across different locations. They are the 44:02 44 minutes, 2 seconds ones which are driving our growth uh in different cities. I think not growing in certain parts are more strategic in nature. We are essentially at this point 44:10 44 minutes, 10 seconds of time um you know sourcing for more than 200 buildings across the country. 44:14 44 minutes, 14 seconds Uh wherever we feel we are getting the right price point wherever the best capital deployment is in place that is where we are expanding. Uh it happened 44:22 44 minutes, 22 seconds to be Bangalore and um you know Gurao and Nida this quarter u or this year but if you would have looked at our numbers 44:29 44 minutes, 29 seconds last year Pune was was uh outshining most of the other players last year. So it it it is about deployment of capital. 44:36 44 minutes, 36 seconds I don't think there is a particular strategy. Yes, every city has a certain mark that we want to get to. Uh which 44:44 44 minutes, 44 seconds some cities might get s faster, some cities might take a little longer but uh strategically wherever we get the best 44:51 44 minutes, 51 seconds return on our capital employed that is where we'll go ahead and keep growing and where our customers drive us. and Vikrar uh to Nitisha's point what is 45:00 45 minutes also clearly reflected in our numbers is a pan India strategy paying us rich dividends because 30% of our revenue actually comes from multi-ity clients so 45:09 45 minutes, 9 seconds 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 45:17 45 minutes, 17 seconds distribution across all of these cities now we firmly believe that we are at a critical scale in each and every city so 45:24 45 minutes, 24 seconds whenever we add new capacity in any city it is going be fairly margin acrative rather than us going and setting up new captives in a city. 45:34 45 minutes, 34 seconds Oh great. Uh there another question is on the IT related issues that also you highlighted in the opening remarks but 45:43 45 minutes, 43 seconds my question potentially the new signups that are happening maybe in the last quarter or maybe ongoing quarters. uh 45:50 45 minutes, 50 seconds how are the deals within the IC companies, the domestic IT companies or international IB companies and the mix 45:57 45 minutes, 57 seconds within the GCS how are they different one year back or maybe in the current scenario 46:06 46 minutes, 6 seconds you know 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 46:15 46 minutes, 15 seconds with you as a flavor is wherever there is new hiring happening Clearly Smartworks is at that inflection 46:22 46 minutes, 22 seconds point providing space for those new hirings. So that would particularly be GCC's, business consulting, engineering, manufacturing and BSSI. 46:32 46 minutes, 32 seconds 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 46:40 46 minutes, 40 seconds to our setup. So from that vantage point given the wide diversity we have across sectors 46:47 46 minutes, 47 seconds we have a fairly good runway ahead of us and today 77% of our net seats sold last 46:54 46 minutes, 54 seconds year were from nonIT ITES um and GCC of course sits outside of that which is where we also start to see 47:02 47 minutes, 2 seconds a lot of promising opportunity ahead of us. 47:06 47 minutes, 6 seconds Okay. Uh my last question [clears throat] was again on the supply side from the large institutional developers. So given the backdrop of 47:14 47 minutes, 14 seconds price increases in certain micro markets and we are also growing this possibly significantly how are we faced in terms 47:21 47 minutes, 21 seconds of sourcing you would say 28th second part of 28 going as are our share towards uh large developers are they 47:30 47 minutes, 30 seconds increasing compared to your sourcing from HNI and family offices. 47:37 47 minutes, 37 seconds 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 47:45 47 minutes, 45 seconds competition at that size is fairly limited. Uh you know when we go ahead and negotiate for buildings ranging from 500 to 900,000 ft. You don't have a lot 47:54 47 minutes, 54 seconds of takers who are coming and committing to that volume of buildings at one go. U you know most of the leasing in India 48:01 48 minutes, 1 second happens at 30 40 50,000t uh sizes. So floor byfloor rentals from institution developers are seeing a 48:09 48 minutes, 9 seconds steep increase. But if you look at large demands coming from larger campuses, bill to suit campuses, that is not where you're seeing a 48:18 48 minutes, 18 seconds significant increase in pricing. And that is where smart works is able to leverage its scale and make sure that we get competitive rentals compared to most 48:25 48 minutes, 25 seconds of the others in the market. Uh that's a mode that we've not have developed right now. This is something that we've demonstrated with multiple buildings of 48:33 48 minutes, 33 seconds 500,000 plus uh which are already there with smart works across different locations. 65% of our buildings are 48:41 48 minutes, 41 seconds non-institutional mix are owned by non-institutional landlords but 35% now is from institutional landlords where we 48:49 48 minutes, 49 seconds are also able to leverage our scale and get better preferential uh rental numbers. 48:56 48 minutes, 56 seconds Okay, thank you for the clarity and wish you best. Thank you. 49:03 49 minutes, 3 seconds Thank you. Our next question comes from the line of Shamit Ashar from Ambbit Capital. Please go ahead. 49:11 49 minutes, 11 seconds Yeah. Hi, thanks for the opportunity and congratulations on a good set of numbers. I wanted to know uh on the VA 49:18 49 minutes, 18 seconds revenue. So they grew this year relatively on a lower base. So what steps did you take to strengthen the VA 49:25 49 minutes, 25 seconds segment in particularly and how do you expect the V revenues to evolve going forward? 49:34 49 minutes, 34 seconds 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. Uh there are two 49:42 49 minutes, 42 seconds parameters of growth on this. One parameter is because of the footprint growth automatically certain value added services like our gym facilities, 49:51 49 minutes, 51 seconds outdoor gaming facilities and some of the other common facilities in the building start generating revenue with expansion of space automatically. That 49:59 49 minutes, 59 seconds will happen. uh our focus on that shifted um only this year where we started going ahead and monetizing most 50:07 50 minutes, 7 seconds of these assets within our buildings. Uh you will see these numbers with the footprint increase uh in the same proportion uh because those are minimum 50:15 50 minutes, 15 seconds services which will be used by uh the users of the campus whoever comes in and uses the campus. As far as design as a 50:22 50 minutes, 22 seconds service is concerned uh that vertical is a more um is a much smaller vertical for us. Uh it's a choice where we're only 50:30 50 minutes, 30 seconds catering to customers who um you know we're not able to cater within a Smartworks building just because of 50:37 50 minutes, 37 seconds assets not being available in that same micro market. So it's going to be more um optional for Smartworks to take up. I don't see that number significantly 50:46 50 minutes, 46 seconds increasing uh over the next few years. I think it'll be pretty much the same number that you see this year. But the value added services uh we think is 50:55 50 minutes, 55 seconds going to scale up naturally 25 to 30% because of the increase in base and then because of our focus uh further scale up 51:03 51 minutes, 3 seconds by another 10 to 15%. So 40 to 45% growth on these numbers should be uh fairly easy. 51:13 51 minutes, 13 seconds Got it. And secondly, have you worked out uh what pricing growth were you able to realize during FI26? 51:24 51 minutes, 24 seconds Thanks uh thanks Amit for that question. 51:26 51 minutes, 26 seconds Yes, from a pricing growth perspective uh for a mature centers our pricing stood at approximately 174 rupees on a 51:34 51 minutes, 34 seconds per square ft basis which was 163 around in fiscal year 25. 51:39 51 minutes, 39 seconds So this translates to about a 5% growth which is what we essentially contracted in in our agreements also. But the good 51:47 51 minutes, 47 seconds 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 and therefore without any 51:57 51 minutes, 57 seconds pricing action if our realizations continue to go up this should disproportionately flow into uh IITa and 52:04 52 minutes, 4 seconds this year's margin expansion of 450 bits right 440 bits was again without uh as much pricing action and therefore we see 52:14 52 minutes, 14 seconds a lot of headroom for this on a go forward basis. 52:18 52 minutes, 18 seconds Got it. And last question, any ballpark number of on FI27's uh capex 52:26 52 minutes, 26 seconds about 3 million square foot would require us to do about [clears throat] 450ish cr of capex that will be required for 52:35 52 minutes, 35 seconds the company's uh expansion platform. That's the fresh capex. 52:40 52 minutes, 40 seconds That's the fresh capex that will be required. And two nuances here. There is going to be also a need for us to incur maintenance capex which we clarified in 52:48 52 minutes, 48 seconds our presentation as well is a significantly smaller part of the outlay that we had communicated in the markets. 52:56 52 minutes, 56 seconds Um and all of this capex funding both in terms of like growth as well as a very small part for maintenance is going to 53:03 53 minutes, 3 seconds be self-funded from the platform's approvals itself. We will not need any further funding for this. 53:09 53 minutes, 9 seconds [clears throat] 53:09 53 minutes, 9 seconds Got it. Thank you and all the best for the next quarters. Thank you. 53:16 53 minutes, 16 seconds Thank you. The next question comes from the line of Utkash Somaya from Ieko Quantum Solutions Private Limited. 53:23 53 minutes, 23 seconds Please go ahead. 53:25 53 minutes, 25 seconds Thank you for the opportunity. Uh can you please give me the uh total demand and supply of flex space in India in the 53:34 53 minutes, 34 seconds quarter first quarter of calendar year 2026. 53:44 53 minutes, 44 seconds Just to clarify uh you're looking at this financial year or you referring to the previous financial year calendar year first three months of 2026. 53:54 53 minutes, 54 seconds Okay, understood. So the total office leasing stood at about 22 million square foot which was absorbed in uh Q1. This is the highest first quarter on record. 54:05 54 minutes, 5 seconds Flex specifically from what we understand was in the range of about 22 to 23% of this and they emerged as uh 54:14 54 minutes, 14 seconds the largest leasing segment for the first time roughly about 5 million square foot or so in the quarter alone. 54:20 54 minutes, 20 seconds Um and following this is uh GCC's uh and from a more macro perspective uh flex space of course last year crossed 54:29 54 minutes, 29 seconds 100 million square foot u and it has tripled uh since 2020. So from so that's broadly the stats that we have. 54:38 54 minutes, 38 seconds So 5 million was the absorption in the first quarter right of this and what is the supply against that? 54:48 54 minutes, 48 seconds supply available in the market would be it's difficult to count out the supply because for flex supply is the entire leading of the market whatever new 54:56 54 minutes, 56 seconds product is coming in uh I don't think we have that number 55:02 55 minutes, 2 seconds today yeah just one quick question so I understand that today the total flex stock is around 100 and it's expected to 55:10 55 minutes, 10 seconds go to 140 million by 2027 and we are seeing an upcycle because the demand each quarter is obviously 55:18 55 minutes, 18 seconds surpassing the supply. So I'm just trying to understand those numbers to figure out where do we stand in the cycle because the moment the new supply 55:28 55 minutes, 28 seconds starts increasing I mean surpassing the demand we will see operating dele 55:35 55 minutes, 35 seconds so that I'm just trying to understand where we are in the cycle. I can maybe give you a idea about the industry and there's a ninth rank report which came 55:43 55 minutes, 43 seconds in which beautifully explains where the demand and supply is the demand supply ratio in India typically used to be at 1 55:50 55 minutes, 50 seconds to 1.1 or 1.2 times. So if the demand was at 400 supply used to be at uh you know 110 to 120 uh typically with this 55:59 55 minutes, 59 seconds report you'll see that nightfrank has projected that over the next few years uh including this year this demand is to supply ratio has gone down to 0.6 6 to 56:08 56 minutes, 8 seconds 0.5 uh which means that in not in flex generally across the market it is difficult no one has really 56:16 56 minutes, 16 seconds taken out a report only on flex on this uh because flex is only a sub segment of the entire market but the entire market 56:23 56 minutes, 23 seconds is seeing a uh a decrease uh in supply the demand which is there so the demand is for 80 million the new supply coming 56:31 56 minutes, 31 seconds in is only to the tune of 50 to 55 million okay and to provide some more color on this because this is a very important 56:38 56 minutes, 38 seconds question that you've raised. Uh in our report as well, we've mentioned and there are multiple estimates available. Supply is not catching up before 2030. 56:46 56 minutes, 46 seconds 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. Uh but if we had to more uh 56:56 56 minutes, 56 seconds directly look at the impact on flex uh the two aspects that we want to call out clearly is that flex penetration is the 57:04 57 minutes, 4 seconds story. It's not the gap. So what was effectively uh 14% penetration today in India in more mature markets is 57:12 57 minutes, 12 seconds significantly uh lower. So we see that there is going to be in fact doubling of the flex segment uh in the coming years. 57:20 57 minutes, 20 seconds And second is just also look at the flex demand. It is structurally enterpriseled now. It's not opportunistic right 70 to 80% of flex is with fiveyear contracts. 57:30 57 minutes, 30 seconds So companies who moved to flex as core portfolio strategy in fact there were a couple of reports that more than 55 to 57:38 57 minutes, 38 seconds 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 57:46 57 minutes, 46 seconds that has happened in the last few years and as long as this acceleration continues flex will continue to benefit 57:53 57 minutes, 53 seconds significantly from this demand supply mismatch. But more importantly even if it catches up the habit shift will ensure that uh the business and the penetration is still is very deep. 58:02 58 minutes, 2 seconds Understood. So in a nutshell for the next till 2030 you don't see flex supply exceeding flex demand you see the demand being higher than the supply right. 58:13 58 minutes, 13 seconds Absolutely. 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 58:22 58 minutes, 22 seconds flexible office space or these are tenants which are setting up new offices altogether and us are uh are opting for 58:30 58 minutes, 30 seconds flexible I think it's a mix of both uh about 7 60 70% of our demand comes from people who have already are shifting from 58:39 58 minutes, 39 seconds traditional offices into flex then you have 20 to 25% % demand coming in from customers who are now looking at setting 58:46 58 minutes, 46 seconds up their first offices in India, GCC's um you know companies who are looking at scaling up who weren't of a significant scale but have scaled up significantly. 58:56 58 minutes, 56 seconds I won't consider them as moving there but just scaling up their operations. Uh so I think it's a mix uh 70% is actually 59:04 59 minutes, 4 seconds from uh people who are leaving traditional offices and moving into flex. So then it will be fair to say 59:10 59 minutes, 10 seconds right that before flex slows down the office space will slow down first and flex will still have demand from the 59:19 59 minutes, 19 seconds switch where people will switch from offices to flex offices and thereafter the flex space will slow down that's is 59:26 59 minutes, 26 seconds that a right okay so the first is vacancies have to go up overall vacancies have to 59:34 59 minutes, 34 seconds go up vacancies currently in the Indian market is one of the lowest that it's ever been Uh so vacancies have to go up significantly for flex to be impacted. 59:43 59 minutes, 43 seconds Okay. And I just have one more question if you allow me. You as a management uh where do what what do you track as a you 59:51 59 minutes, 51 seconds know like a risk sign if this something like this happens we should like we should be cautious and stop uh stop uh 59:58 59 minutes, 58 seconds increasing stop growing or reduce our supply stop increasing supply. What do you look at internally as a risk metric? 1:00:06 1 hour, 6 seconds So three things. So number one we we first track uh you know the asset liability mismatch whereas where is the new supply coming in from when is the 1:00:14 1 hour, 14 seconds new supply coming in if there is an over supply in a certain micro market or a certain location uh we try to factor 1:00:22 1 hour, 22 seconds that in into our decision making and try to stay away there is a methodology of of ranking each and every micro market in India we have 27 relevant micro 1:00:30 1 hour, 30 seconds markets which are scaling significantly and then there are a few which are now developing uh we track all of those micro markets. What is the supply which 1:00:39 1 hour, 39 seconds is coming in? Uh the good part about commercial real estate is that product can't come overnight. Any building that 1:00:46 1 hour, 46 seconds is coming over the next 5 years, we already have that data for that building. Uh you know, so the predictability on asset supply is very very high. Uh so we first track that. 1:00:56 1 hour, 56 seconds Then we also track um you know micro market what is the vacancy levels at what are the rentals levels at and there 1:01:04 1 hour, 1 minute, 4 seconds are other metrics before we go ahead and take and expand into any location and that's the reason you will not see us expand into every city in the same shape 1:01:12 1 hour, 1 minute, 12 seconds manner and form uh you know we're we're only going wherever we seeing uh demand outpace the supply. 1:01:20 1 hour, 1 minute, 20 seconds No good thank you so much and good luck. Thank you. Thank you. 1:01:27 1 hour, 1 minute, 27 seconds The next question is from the line of Priyan Chaporium from Omega Portfolios Advisors. Please go ahead. 1:01:34 1 hour, 1 minute, 34 seconds Yeah. Hi. Uh, congrats on the strong performance. I just wanted some operational figures. Uh, could you give 1:01:40 1 hour, 1 minute, 40 seconds me the lease as a percent of dentist for two particular cities? Uh, just Mumbai. 1:01:49 1 hour, 1 minute, 49 seconds Sorry, can you repeat that question? Sorry, we lost you in the middle. Sorry, am I audible properly? Yeah. 1:01:56 1 hour, 1 minute, 56 seconds Yeah. Okay. So, I wanted uh some operational figures. Uh lease as a percent of rental revenue for just two cities uh Pune and Mumbai. 1:02:07 1 hour, 2 minutes, 7 seconds 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 to593 crores is the 1:02:16 1 hour, 2 minutes, 16 seconds what we have reported over a overall revenue from operations of 1796 crores 1:02:23 1 hour, 2 minutes, 23 seconds that is at a company level and uh you want for a city level specifics as well right? Yes. 1:02:31 1 hour, 2 minutes, 31 seconds But city level specific uh revenue we do not report per se. As far as the supply is concerned, you've actually reported what is our overall supply 1:02:40 1 hour, 2 minutes, 40 seconds [clears throat] 1:02:41 1 hour, 2 minutes, 41 seconds which is there in line of our investor presentation. That will give you a fair mix because we also continue to report our committed occupancy and actual end of period occupancy as well. 1:02:53 1 hour, 2 minutes, 53 seconds Uh so 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. 1:03:05 1 hour, 3 minutes, 5 seconds And uh directionally uh Pune and Bombay together are close to about 40% uh of our current uh 1:03:12 1 hour, 3 minutes, 12 seconds footprint. So that's the best market for you. Okay. All right. Understood. Thank you. 1:03:20 1 hour, 3 minutes, 20 seconds 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. 1:03:33 1 hour, 3 minutes, 33 seconds 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 1:03:41 1 hour, 3 minutes, 41 seconds to our detailed shareholder letter. Uh FI27 is set up to be a year of accelerated compounding and we look 1:03:48 1 hour, 3 minutes, 48 seconds forward to delivering against the guidance we've laid out. Wishing you all a very good week uh evening and a good long weekend ahead. Thank you all. 1:03:58 1 hour, 3 minutes, 58 seconds Thank you on behalf of Smartworks Co-working Spaces Limited. That concludes this conference. Thank you all for joining us. You may now disconnect your lines.