Awfis Space Solutions (NSE:AWFIS) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Awfis Space Solutions Limited q one FY twenty seven earnings conference call hosted by Institutional Equities. Before we begin, a brief disclaimer. This conference call may contain forward looking statements about the company, which are based on the belief, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance, and it may involve risks and uncertainties that are difficult to predict. 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 call, please signal an operator by pressing star, then 0 on your touch tone phone. Please note that this conference is being recorded.

0:56 I now hand the conference over to mister Rahul Kunani from Institutional Equities. Thank you, and over to you, sir. Thank you, Palat. Good evening, everyone. On behalf of Nirubhavang Institutional Equities, I welcome you all to the q one FY twenty seven earnings call of Office Space Solutions Limited. The management is represented by mister Amit Ramani, chairman and MD, Mr. Sumit Lakhani, CEO Mr. Sumit Rojlani, the CFO. I will now hand over to the management for their opening remarks. After which, we will open the floor for Q and A. Over to you, sir. Thank you, Rahul. Thank you, and good evening, everyone. A very warm welcome to all of you for joining us on the call today. I'm joined by Mr. Sumit Akhani, our CEO Mr. Sumit Toshkhani, our Chief Financial Officer and our Investor Relations Advisor from SGA.

1:48 Our Q1 FY 'twenty seven results presentation has been uploaded on the exchanges, and I hope you've had a chance to review it. Before I get into our performance, I want to spend a moment on the broader landscape because the momentum we are building on continues to strengthen. India's office market delivered its strongest first half on record H1 twenty twenty six with gross leasing of approximately 43,000,000 square feet, up 5% year on year. GCCs remains the single biggest driver of the demand, leasing 16,500,000 square feet and growing 38% year on year and now accounting for almost 38% of the total office leasing in the country. Flexible workspace operator posted their strongest half year performance yet, leaving 8,400,000 square feet, a 55% increase over H1 twenty twenty five and the highest ever half yearly volume the segment has recorded.

2:42 India's GCC ecosystem itself has now crossed 2,100 centers, generating nearly USD 100,000,000,000 in revenue with installed talent exceeding two point five two point three million people and accounting for over 40% of India's commercial real estate leasing. The AI wave continues to accelerate this. India now ranks one globally in AI hiring intensity across GCC markets, and GCCs are increasingly choosing India not just as a cost destination, but as a genuine innovation and product hub. This plays directly to our strength across GCC's managed office and co working alike. Starting with performance highlights for this quarter. We are pleased to report another quarter of strong execution.

3:30 Revenue grew by 27% year on year to INR $4.25 crores, while EBITDA increased 28% to INR 162 crores, with EBITDA margin expanding to 38.2%, profit before tax stood at INR 24 crores, and we continue to deliver industry leading capital efficiency with a ROCE of 55%. Our co working business grew 27% year on year, driven by sustained demand from enterprises and global capability centers. Alongside the continued premiumization of our portfolio, the GCCs and Fortune 100 companies have become a structural part of our client base. Today, we serve 100 plus unique GCC clients, contributing 24% of our rental revenue, up from smaller base just a few years ago with additional mandate already secured and expected to commence operations over the coming quarters.

4:23 Our transformed business, Construction Fit Out Solutions, delivered 25% year on year growth, supported by a healthy pipeline of projects from large enterprises and GCC, particularly those expanding into new geographies or consolidating operations into hybrid technology enabled workplace. This business has evolved well beyond its in house capability, a shift it will come back I'll come back to shortly and is now contributing meaningfully to revenue growth while accelerating project execution across our portfolio. Let me walk you through the five growth engines we outlined last quarter, each of which continues to strengthen the business. GCC demand environment remains robust, led by enterprises and global capability centers expanding their footprint across India.

5:12 As clients increasingly prioritize high quality workspaces in prime business district, our focus on premium grade A plus assets continues to position us well to capture this opportunity. The GC's client life cycle at office follows a predictable pattern. Clients typically enter at 25 to 50 seats, expand to 100 to 300 seats as operations mature and increasing movement to manage office mandates over time. This creates long term revenue visibility, deep stickiness and rising allied services attach rates as relationships deepen. To minimize action at a scale during this quarter, we further strengthened our premium supply pipeline by setting a co branded developer partnership with Malpani Estate for two grade A plus assets in Pune for 1.4 lakh square feet, a first of its kind capital light construct for office in this format.

6:07 Malapani Estates is a Pune based headquarter business group with the legacy of over one hundred years and well established real estate development track record across commercial, residential and industrial projects in the city. Partnering with the developer of this pedigree gives us confidence in both the quality of the assets and the pace of delivery. We are also buying ultra premium grade A plus assets in 30,000 to 50,000 square foot bracket, spanning both live and under construction building. We now have seven properties in our premium across micro markets, including Hipal, Golf Course, Whitefield, Guarli and two properties live and five under construction. These additions reinforce our presence in high demand micro markets, and are expected to command pricing of which is 30% to 50% higher than our existing portfolio, providing a strong runway for future revenue growth and margin expansion.

7:01 As of June 30, we operated 37 gold and elite centers across key enterprise and GCC hub. Minimization is translating into structurally better realization, stronger pricing power, longer client relationships and a high quality revenue mix. And importantly, the full financial benefit is still ahead of us. These centers continue as these centers continue to mature. We have also continued to build on our wellness and compliance credentials. AWFIS remains the first portfolio wide certified co working brand with well ratings now spanning 35 centers. Our premium footprint now spans EGCC hubs, including all seven tier one cities, giving us presence exactly where premium demand sits.

7:47 These centers are increasingly the foot front door for enterprise conversion, large managed office mandates and high allied service attacks. Our execution pipeline remains healthy with firm focus on adding supply where enterprise demand is deepest, not simply expanding for its own sake. The next engine is multi format supply. And this quarter, it's worth talking through in some depth because the strategy is now showing up clearly across all three distinct pillars. The first is our revamped managed aggregation model, which runs into two arms. The first arm is developer partnerships. During the quarter, we signed a partnership with Malpani Estate, a leading Pune based insurer developer for two grade a plus properties spanning across 1.4.

8:34 This is joint branding construct and to our knowledge, the first of a kind partnership model in Indian flex. It gives us grade A plus supply at scale with low balance sheet drag, directly strengthening our industry leading ROCE. The second arm is Classic MA, where we apply strict filters to build a distinct product from value format players focused squarely on higher seat realization and higher velocity of sales. We have signed six Grade A properties across premium micro markets, including Viman Nagar in Pune, Sane in Mumbai, Rajarhat in Kolkata and Sector 62 in Noida, with seven more properties in the pipeline at approximately three lakh square feet. The second pillar is selectively. While we are using deliberately for ultra premium assets, the capital, not the default. These are signed in 32,000 square foot bucket, live and under live and under construction, and our pipeline here now stands at seven properties.

9:34 The strategy here is to build real depth in five to seven core micro market and become the number one operator in each rather than spreading ultra premium supply chain. The third pillar is partial managed office, our hybrid model that gives us anchor economic unit anchor unit economics from day one and co working yield on the balance of the center. We signed a property only once 50% of the model seats are already committed at an enterprise GCC client with the remainder filled through. What particularly encouraging is how broadly this format is resonating. We have now signed partner clients spanning across auto components players, a mobility platform, a global retail and luxury group and a technology talent company. Four very different businesses, one format that's real validation that this isn't a niche solution. It's a genuinely scalable model.

10:26 Taken together, these three players give us 12,000 plus seats on track in H1 of FY 'twenty seven, and we remain on course to meet our full year supply guidance. Organic growth is the fourth engine expansion from within our existing client base and one of the most powerful, often underappreciated levels we have. We have seen faster sale velocity with higher renewals across smaller cohorts and larger sheets expansion from existing client base. Thus, this translated into real velocity this quarter. We sold 13,000 seats in Q1 FY 'twenty seven alone, reinforcing the demand across our client base remains large, long tenure and structurally sticky. More importantly, we continue to see a natural expansion journey within our client base. A customer may initially enter through overtake, subsequently move into managed office solution and eventually engage office transform for design build.

11:21 This creates a powerful compounding effect that strengthens customer relationships while increasing wallet share over time. Alongside this, we continue to actively optimize the portfolio where center no longer meets our return thresholds or fit our premium portfolio strategy, exit, redeploy capital into better opportunity. This disciplined portfolio management remains one of the key advantages of our capital light business model. Beyond coworking, our integrated workplace solution platform continues to scale rapidly. This quarter alone, Transform delivered INR 73 crores in revenue, and we are seeing significantly large mandate as enterprise increases increasingly engaged office for end to end workplace solutions. This comes with a INR 200 crore plus in mandates already won for this year.

12:10 The cross sell flywheel underpinning is one of the most powerful aspects of the business. 80% of our external D and B revenue comes from clients who first entered to our Flex portfolio and in the works way and it works the other way too. Transform clients are increasingly anchoring for future flex and manage office demand back into the office network. Key wins span a genuine a genuine cross section of enterprise India, a global IT consulting major, three lakh square feet, a renewable energy infrastructure group, one lakh square feet, global e commerce major, 67,000 square feet, a diversified normal rate, 65,000 square feet, with BPO customer experience major at 50,000 square feet. Allied services across IT, F and B, transport, business support continue to scale rapidly as high margin layer over our core seat economics.

13:03 This not only validates the strength of our execution capability, but also expands our addressable market well beyond managed workspaces. Together, these five growth engines of premiumization, GCC demand, multi format supply, organic growth and workplace solutions serve as growth pillars to one another rather than stand alone initiatives. A premium center attracts the GCC client. A GCC client expands across multiple office locations and adopts additional workplace services, managed office engagements create opportunities to transform each successful enterprise relationship, strengthens our ability to secure future developer partnerships and partial managed office opportunity. Interconnected flywheel is steadily gaining momentum and provides us with a strong foundation for sustainable long term growth. Finally, our growth continues to be underpinned by strong financial discipline, and this is worth dwelling on for a moment because the scale of what we have built runs directly counter to how much capital we have actually needed.

14:04 Between Q1 FY 'twenty five, the quarter we went public and Q1 FY 'twenty seven, we added 59,000 net seats while investing close to INR 400 crore in new center openings. Over this period, revenue grew by 65% from INR $2.58 crore to INR $4.25 crore, a 28.3% CAGR, while EBITDA grew to 105 percent from INR 79 crore to INR 162 crore, a 43.2% CAGR despite this expansion. And after raising only INR 128 crore through our IPO, we continue to maintain a net cash position with a net debt to equity ratio at a negative 0.08x. Put simply, we have deployed more than 3x what we raised at listing entirely through our own operating cash flows without single subsequent capital raise.

14:58 The discipline shows up in our cost of capital. Cost of borrowing stands at 9.05 with an incremental cost of new borrowing even lower at 8.5%. This is a direct reflection of A plus stable outlook credit rating we carry and further proof that balance sheet strength we have built is being recognized by lenders, not just visible on paper. This reflects the strength of our operating cash flows and demonstrates that AWFIS can continue to scale while maintaining industry leading capital efficient. Looking ahead to the remainder of 5527, we remain on track to add 22,000 to 25,000 feet on gross basis for the year. We expect our co working business to grow by 23% to 25% year on year, with Transform continued to scale at about 20%, taking overall revenue past INR 1,800 crores for the full year. On profitability, we expect cash EBITDA performance to improve in the second half relative to the first, with a full year cash EBITDA in the range of INR 190 crores to INR 200 crores.

16:04 Looking ahead, we remain confident in the long term opportunity, our expanding premium portfolio, deepening enterprise and GCs relationships, growing workplace solutions platform, proven ability to serve client across sizes and sectors and disciplined capital allocation. Together, these will give us multiple levers for sustained growth. As the flexible workplace industry continues to evolve, we believe office is uniquely positioned to capture this opportunity while continuing to deliver sustainable, profitable and capital efficient growth. With that, let me hand over the call to Sumit Sakhani, who will take you through the operational highlights for the quarter in greater detail. Thank you. Thank you, Amit, and good evening, everyone. Let me walk you through the operational highlights for Q1 FY 'twenty seven.

16:53 Our network continued to expand in a disciplined manner during the quarter. As of June 2026, office operated two forty two centers across 18 cities with another nine centers under fit out, taking our total network to two fifty one centers. Including signed LOIs, our pipeline stands at two sixty seven centers. On the seat front, our operational capacity increased to approximately 159,000 seats, while total capacity, including centers under fit out, reached 170,000 seats. Including signed LOIs, our total supply stands at over 185,000 seats. During the quarter, we added approximately 4,600 gross seats against roughly 1,800 seats exited as part of our portfolio consolidation.

17:40 We remain on track to accelerate additions through the balance of the year as our premium pipeline becomes operational. Consistent with our strategy, virtually all our new supply continues to be concentrated in premium grade A assets across high demand micro markets. During the quarter, our Elite portfolio expanded from eight to 10 centers, while our gold portfolio remained at 27 centers, further strengthening our premium offerings for enterprise and GCC clients. Before I get into our network metrics, I want to address one development that shaped the quarter's occupancy. One of our enterprise clients with nearly 3,000 seats across five centers in three cities consolidated its operations into conventional office space in May 2026, following its acquisition by a multinational company roughly fifteen months ago.

18:32 As a result, occupancy across centers operational for more than twelve months stood at 83%, marginally lower than last quarter, while overall portfolio occupancy held steady at 76%, in line with Q4. Despite absorbing this one exit, which speaks to the underlying strength of demand across the rest of the portfolio. It's also worth remembering that in a business of our scale, 1.5% to 2% of inventory naturally turns every month as enterprise clients expand, consolidate or relocate. This was simply a larger, more concentrated instance of the same pattern. Importantly, the replacement cycle has already begun. We have pre committed a significant chunk of the vacated capacity, and the balance is seeing healthy traction from enterprises and GCCs evaluating premium workspaces across our network in several cases at a better pricing than the existing client was paying.

19:27 On the demand side, our active client base increased to over 3,600 clients. Client stickiness continues to improve. The weighted average client tenure has increased to thirty eight months, while average lock in tenure improved to twenty six months, providing greater revenue visibility and reinforcing the resilience of our business model. Our enterprise led positioning remains intact. Corporates and M and Cs continue to account for approximately 64% of our client base, supported by a well diversified mix of SMEs and startups. Sector diversification also remains healthy with technology, professional services and BFSI continuing to be key demand drivers during the quarter. Our client base remains deliberately diversified by design rather than by chance.

20:17 By industry, technology accounts for 39% of our client mix, professional services 21%, manufacturing 12%, BFSI 13%, health care and life sciences 5%, with the balance spread across other sectors. No single sector represents an outsized dependency and our resilient sectors, those less exposed to cyclical downturns account for over 40% of the base insulating occupancy through cycles. By domicile, 52% of our clients are India headquartered, driving faster conversions and shorter ramp cycles, while 43% are North American or European headquartered, bringing structured mandates, better tenures and higher light services realizations. From a portfolio perspective, we continue to maintain a balanced mix of across seat cohorts.

21:08 Large enterprise clients remain an important part of the network, while smaller and midsized clients continue to provide occupancy velocity and a healthy funnel for future managed office opportunities. Clients with 500 plus seats account for 37% of our portfolio, our most premium and stickier segment. Let me also give you a fuller picture of our GCC business. As of June 30, we serve 100 plus unique GCC clients contributing 24% of rental revenue across nine cities in India. The parentage have skews heavily towards North American, 79% of our GCC clients are North America headquartered with 15% from Europe and remaining 6% from Asia and Asia.

21:53 Our focus remains deliberately mid market. These are global enterprises, not legacy captives, and we continue to see strong traction from first time and early stage GCCs entering India. We hold clear leadership in the micro and nano categories, which is 25 to 100 seats, and we are increasingly winning large GCC mandates too with multiple mandates over thousand seats now closed. The client life cycle here follows the predictable carton. Client typically enters at 25 to 50 seats in coworking or bold elite formats, expand to 100 to 300 plus seats and into managed office as operations mature and deepen their allied services attachment as tenure length. This is why GCCs choose office specifically, one platform for launch of operations, expansions, workspace strategy, planning, and grade a plus fit outs entirely in house.

22:47 A single partner across IT, F and B transport, and business support, and long standing consultant relationships that give us the right to pitch on new mandates. Overall, the operational indicators continue to move in the right direction. We are expanding our premium network in a disciplined manner. Occupancy has held firm despite a one off client event. Client relationships are becoming deeper and stickier, and the quality of demand remains robust. Combined with our healthy supply pipeline, we believe the business is well positioned to sustain its growth momentum over the coming quarters. With that, I'll hand over the call to Sumit Rishlani for the financial update. Thank you, Sumit, and good evening, everyone.

23:35 Let me walk you through the financial performance for Q1 FY 'twenty seven in detail. At the outset, from this quarter onwards, we have introduced cash EBITDA as an additional financial metric to provide investors with greater visibility into the underlying operating performance of our business. Over last few quarters, we have received feedback and suggestions from investors and analysts covering our sector to use cash EBITDA as one of the key metrics. Therefore, we have adopted it as one of the financial metrics going forward. To give investors additional view on the financial performance, over and above the reported India's financials and other metrics that we have been reporting. The set metrics has been reported on Slide 20.

24:26 For the current quarter, the metric and related reconciliation and adjustments have been validated by MSKA and associates, which is part of PDO network under an agreed upon procedures engagement as a good corporate governance practice. For the quarter, reported revenue from operations as per India stood at INR $4.25 crores, registering a growth of 27% year on year. Within this, our Coworking and Allied Services segment grew 27% year on year to $3.52 crores. The Construction and Fit Out Services, our transformed business grew 25% year on year to 73 crore.

25:16 Moving to profitability. Reported EBITDA as per India was INR 162 crore, up 28% year on year. The profit before tax as per Ind AS stood at INR 24 crores, up 135% year on year. Referring to Slide 20 of the presentation under Ind AS 116. Certain long term lease arrangements are accounted for as finance leases, which impact the timing of revenue recognition. Adjusting for these accounting treatment, normalized revenue stood at $4.37 crores, reflecting a healthy 35% growth year on year.

26:10 To better reflect the operating performance of the business, we adjust for finance lease accounting, deduct the actual cash lease rentals paid during the quarter and exclude noncash ease of expense. On this basis, cash EBITDA stood at INR 44 crores, up approximately 34% year on year with the cash EBITDA margins at 10.1%. Operating PBT stood at INR 11 crores compared to INR 10 crores in the corresponding quarter last year. Our balance sheet remains in excellent shape. We continue to maintain a net cash position with net debt to equity at 0.08 lakh, reinforcing the financial discipline that underpins our growth.

26:58 On returns, ROCE sustained at 55%. Just as importantly, our revenue to gross fixed asset ratio came in at 1.5x. Overall, the quarter reflects continued healthy growth in our core business and improving profitability. With that, we conclude our opening remarks and would like to open the floor for questions and answers. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may please press star and 1 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 use handsets while asking a question.

27:48 Ladies and gentlemen, please wait for a moment while the question queue assembles. The first question is from the line of from. Please proceed with your question. Hello. Am I audible? Yes, sir. Yeah. Hi. Thanks for the opportunity. So I wanted to know if you look at your q four and q one, so your rental payments have increased from 85 to $1.30 odd crores, and seats have been... I mean, the gross net seat additions have been in the range of 3,000 to 4,000.

28:37 So can you please explain the jump in the rental payments? And secondly, I want to know, like, is your strategy of, you know, going for straight lease benefiting you? Because clearly, margins aren't showing up. So will you continue to go more towards straight lease? Because even if you look at your occupancy, they are kind of constant in the range of 76% in the since the last two, three quarters. So please could you just highlight, I mean, what is going on, what is your strategy going forward? Sure. To answer your first question, you're taking these numbers from the cash. Part of our rental expenses are also disclosed in the other expenses.

29:26 The other expenses, if you look at the detailed financials, what they are available, the rental expenses and the other expenses have not grown, other they are flat. So the other the rental expenses that are part of other expenses primarily includes the rental paid profits on managed aggregation model and as well as rental paid on the lease transactions where we were out of lock in, which means that we were not doing the accounting for those leaders under 116 and rental was being accounted as it would get accounted in pre India's era. So if you now consider both, then the growth or the growth percentage is in line with the growth in the industry.

30:15 So I hope I answered your question. The second part of your question, let me take that. So the blended occupancy obviously has held flat at 76% matching the q four despite us having to absorb a one large enterprise consolidation which Sumit mentioned. That's the final real underlying trend, not a stumble. The mature cohort dipped marginally to 83% from 84 entirely attributable to that same one off exit. We have already pre committed significant chunk of the vacated capacity through signed agreements, not just conversation and several cases at a better pricing than before. That gives us real confidence in the recovery path rather than just hope here. And had that single client not exited, we would have had been on track to show clear improvement across both the occupancy mix.

31:08 Hello, Samit, sir? Is your an... Is your question answered? Yeah. Yeah. Yeah. And I also wanted to know, like, you know, manage the aggregation model is like a core trend. And since last quarter, I mean, even it was 62%, and now it's, I think, 57%. So now just want to know that will you keep continue doing more of straight leads going forward for the rest of the, I mean, quarters? So managed aggregation continues to be an important part of our supply strategy, accounting for 57 of our current supply, as you mentioned. We are not fixated on the MA split versus the SL split. We let the market and the specific opportunity kind of decided for us. We are becoming obviously more selective overall choosing whichever structure, MA developer partnership or selectively that delivers the best realization for us. The risk profile for a given asset in a micro market rather than forcing every deal into a one lease type, this is not a shift from MA, let me just be clear here. It is broadening of the playbook. Commercial listed obviously moves in cycles and the right lease structure for a given micro market or an asset changes as those cycles do. So is it it used used intentionally intentionally reserved deliberately for a handful of ultra premium anchor value micro markets. And within our MA model, we are utilizing both developer partnership and classic MA to secure quality at low risk supply together. Together, these give us more tools

32:39 to capture demand profitably across a wide range of situation. Got it. And just one last small question. What would be your overall CapEx guidance for FY 'twenty seven? So that CapEx guidance would be roughly in the range of about 200 to two ten. Okay. Thanks and all the best for the remaining quarters. Thank you, sir. Thank you, sir. The next question is from the line of from Bank of Baroda Capital Markets. Please proceed with your question. Hi, team. Thank you for taking my questions. I'd like to know more about your developer partnerships.

33:25 So to start with, at what stage of construction do you sign these deals? More specifically, from the date of signing, when is the typical office asset expected to be delivered? So these are different across various deals now, specifically with respect to the developer partnerships, which are... And we are... Why we are calling it partnerships in a simple supply is because this entails a situation where we are making the supply acquisition risk averse and capital efficient, where the developer is also investing into the capital into the fit outs as well as giving us more preferable kind of rent fees as well as participating in the overall profit share.

34:19 Broadly, the way we are looking at it is couple of these properties will go live over a period of six months to next twelve months. So these are... Where these properties will go live. And these I'm talking about are the buildings going live. So our centers could go live between nine to fifteen odd months kind of scenario. Second, in terms of a couple of premium straight lease centers, which we are signing across various grade a properties, Few of them we are signing up are in ready to move properties, but few of them we are signing across in various forward leasing structures where the buildings are under various stages of construction.

35:06 So as you know, we are on the path of, you know, working across premium business model. So we are also taking a phase wise approach of picking up these properties, but the idea is to lock the grade a plus supply across the no brainer kind of micro markets right now. And these, are signing up with properties which are going live from next six odd months to next twenty four odd months. So that's been the kind of a strategy from our side. But the core is we want to lock the strategic supply across the key micro markets across the new upcoming assets. Thank you. That is really clear. Just a little bit more on this. Furthermore, what do AWFIS' typical capital contributions to these projects look like, like over the six to twelve months that you mentioned? And lastly, on the lease partnerships, how how long does office have access to the space?

36:05 Sorry. The second part of it? Along the lease... Can you repeat the second part of your question? Yes. Sure. The... Under such partnerships, how long does AWFIS have access to the space to lease up, basically, your tenants? So in terms of the capital contribution ranges from about around 50 odd percent of the overall fit out value. Day one, it's a small kind of a security deposit which gets committed till the property goes live. So from that perspective, it's not very capital intensive day one at the time of signing. In terms of clients, we look at marketing these properties almost about, you know, four to six months before the center goes live.

36:53 Okay. Does that mean for you? Yeah. No. Actually, just on the last bit, like, I I meant to ask, let's say you signed this partnership and you get access to the space. How long do you have access to the space? Like, what is your ten and ten year with the landlord? Okay. So our... So we are signing up a nine term... Nine year kind of, you know, agreements with these properties, the nine year kind of tenure around on these properties. And our excess starts from the date of signing where the property is under construction. And the nine year starts from the day when the OC of the building is received and we get the position of the property. Got it. Thanks again.

37:41 Thanks. Thank you, sir. Ladies and gentlemen, to ask a question, please press star and 1 now. Participants who wish to ask questions may please press star and 1 at this time. The next question is from the line of from Indo Health Wealth. Please proceed with your question. Yeah. Thank you. So my question here is, the chargeable area went from around almost 5,000,000 square feet to 8,400,000 square feet over the last eight quarters. It's up almost 68%, whereas the revenue went up from $2.58 crores to $4.25 crores. It's up only 65%.

38:33 So the revenue is growing slower than the area. So per square foot revenue is probably stable to declining. So can you give us a little bit idea about the operational seat per month cost between, say, q one FY twenty five, q one FY twenty six, and q one FY twenty seven. And some insight into what is really leading to this fairly stable kind of a revenue on a per square foot basis. Sure. So, Shwendik, I would like to correct you around on this analysis where 68% versus 65% because one, dischargeable area also includes the seats which are under fit out. So those seats are not live.

39:25 But but it's an interesting kind of metrics which we put across. And I would want to highlight one point, the net seats in Q1 of FY 'twenty five were about 100,000, which at the end of Q1 FY 'twenty seven are 159,000. So which is 59% is the net operational seat increase. Now corresponding to this 59% net seat increase, we had a 65% kind of a revenue growth. So from that perspective, we are doing well. And on top of it, if you factor in 76% of the blended occupancy, so revenue growth clearly is going to outgrow in terms of the overall seat growth and as well.

40:12 Okay. But in this period, Amit, you've also increased the number of goal centers, you have 37 goal centers and elite centers, where probably the cost per seat would be much higher, right? In the other markets or other centers, do you see almost a flat prices? Because the market is so robust. I mean, we we we should expect price to go up on a per square foot basis. Right? So if you look at the overall seat realization trend, even over the last couple of quarters, let's say, eight quarters also, you would see the price per seat as a trend almost going up almost every quarter. See, our business inherently, even in a single kind of a center from same kind of a customer also gives us an opportunity to have at least, you know, four to 7% kind of contractual escalation from the same customer.

41:12 From that perspective, we are seeing price realization increasing. Second, last twelve to fourteen months, the kind of focus we had with respect to getting more premium centers on board, that's also reflecting in the overall price realization. So it has... I don't have a clear number, but at least from Q1 of FY 'twenty five to Q1 of FY 'twenty seven, if we would look at the percentage kind of pricing fees on a seed basis, it would look very healthy., sir, is that answer your question? Yes. Thank you. Thank you, sir. The next question is from the line of Rahul from Bank Institutional Equity.

42:06 Please proceed with your question. Yeah. Hi. I had a couple of questions. The first one was on Transform, which is third party revenue share, which is at nearly 92% this quarter. So what is driving that? And is it sustainable at this level? Oh, sorry. Can you hear me? Yeah. Am I audible? Yes, sir. Yeah. Yes, sir. Yeah. So third party mix obviously is flipped structurally. Transform started when we initially started. It started off as a captive fit out arm, serving our own centers today. And today, it's majorly third party, externally facing design and build business, compounding on its own momentum at this stage.

42:55 The shift, obviously, is being driven by enterprise and GCC's increasingly engaging office for multi city national put out mandates and self reinforcing process loop where flex relationships convert into transform and transform clients turn into anchor future flex and managed office demand. Firstly, it's obviously worth noting that the split will move around a bit quarter to quarter, but since it's partly a function of how many projects under MA are being delivered and build in any given period, not a fixed ratio. 92% is general reflection of this quarter's delivery mix. We would expect the number to stay structurally high, even if it moves within a range depending on project phasing. Right. What are the margins in this business now? Where do you see the stable check margin in the business?

43:43 So the margin profile of the business is kind of split into two. When we do... What we do with our landlord partners, typically, it would be about a 15% gross margin. As far as to look at the third party margin, that ranges anywhere between 18% to 20%. And so between the two businesses, depending on the volume on each, it would somewhere be in the 17% to 18% range. Right. And sir, on the industry side, how is this flex? You know, how is the GCC industry evolving now? And where does office sit with that in in terms of percentage contribution from the GCC? So obviously, India, as I mentioned in my commentary, that obviously, the gross leasing has been about 43,000,000 square feet in the commercial.

44:31 And the flex operators today posted the strongest half year, obviously, of 8,400,000 square feet, which is 55% increase from FY 'twenty five and highest ever half yearly volume that we have done the segment has done. Less penetration of overall leasing has climbed from single digits to today, 21 today, and this is on a clear path towards roughly 25% by 2027. Annual flex transaction stock has grown from 38 to 38,000,000 square square in 2020 to 110,000,000 to 114,000,000 square feet in 2025. It's almost fourfold increase, and this is no longer just a discretionary category, but it is a mainstream permanent part of our enterprise solution right now. Layered on top of this is GCC opportunity, the single strongest structural tailwind in commercial real estate market. GCC led H1 twenty twenty six demand, leasing was 16,500,000 square feet and growing 38% year on year, now accounting for almost 38% of the total office business that is happening.

45:30 India's ecosystem has crossed almost 2,100 centers, generating nearly 100,000,000 in revenue. This is across 2,300,000 people that are employed across these DCCs. Over 40% of India commercial industry leasing is happening in this category. Office is obviously the largest network. We have the most capital efficient model and model platform, specifically with GCC enterprise demand. It's on the right side of every one of these trends. We, as I mentioned, 24% of our revenue today comes from GCC that is serving about 100 plus GCC clients. We look at that trend continuing to grow as the GCC story continues to expand and the robust commercial real estate market. Right. And one on the deal after this developer deal with Malpand, are there more such deals in the pipeline?

46:23 Yes. As Sumit mentioned, there are a couple more deals that we are curating right now. Obviously, these deals take a bit longer because there are much more complexities involved in terms of engaging in terms of the partnership overall than a straight fee structure. But yes, there are a couple more deals in the pipeline. Also, we are doing this with only grade A plus developers, right, where our continued direction for premiumization as well as engaging with the right partners becomes important. So obviously, there are... I mean, there might be multiple developers, but the choice developers in the grade a category, obviously, are less than the overall developer. So we wanna make sure that we develop... We partner with the right developer partner in this case.

47:10 The last one from my side in terms of the entire growth reflecting in the margins and the occupancies moving up. When do you see this... The needle moving meaningfully for us on the occupancy and on the margin front? See. So primarily, the way we are building the whole business and how the seats are going up, occupancy percentage, this is the first quarter where this has remained a bit more flat. Otherwise, across every quarter, the occupancy percentage had been on an uptick kind of scenario. What I see is overall H2 going to be better than H1.

48:00 And I think Q4 is one quarter where you will at least start seeing a meaningful kind of a difference both in terms of occupancy, the impact of a couple of more elite and gold centers coming in, in the margins as well. Got it. That's it from me. Thanks so much for this. Thank you, sir. The next question is from the line of from Maximal Capital. Please proceed with your question. Yeah. Hi. So I hope I'm audible. Yes, My first question is regarding the pipeline of the premium and the grade assets that you commented earlier. So if you can give us some quantitative sense, like, you know, what percentage of our portfolio is currently premium and grade A? And how will that mix evolve by end of FY 'twenty seven and FY 'twenty eight?

48:58 And are all these institutional? Or we have some non institutional mix here as well? So overall, as Sumit had highlighted that we have about two fifty odd centers, 42 centers that are live as we speak. Out of those, about roughly 31 centers are in the golden 37 centers are in the golden premium category. So that approximately makes it about roughly 15% of the portfolio is in the premium category. This year, we have, as we mentioned in our commentary, there are seven additional properties that are in LOI stage, and there are six properties that are in fit out stage. All of these, whatever 13 odd properties, are all in the premium. I would say majority of these, at least, I would say 10 out of the 13 are in the premium category, which includes gold and elite type of center.

49:56 So by the end of this year, we anticipate by FY '27, this eighty five fifteen split could be more closer to eighty twenty split. Okay. And so all all of these are, like, institutional developments Yes. All of these are institutional assets in I mean, select micro markets, yes, but all are institutional. Okay. Okay. And my second one is on the outlook or the revenue and the cash EBITDA guidance that you provided, and thanks for disclosing that, by the way. So sir, if I take 25% of revenue growth and 200 CR of cash EBITDA, that comes about 10% sort of margin, right? I mean, I was expecting this margin number to be slightly higher as long as we maintain the mature cohort occupancy intact at like 85%.

50:58 So can you explain, I mean, it understated or we are expecting some kind of attrition in our mature cohort? If you can just elaborate on that guidance. See, in terms of the overall guidance, one thing, yes, you are right. Our margins currently are the cash EBITDA margins are looking somewhere in the range of 10% odd. I would say is H1, we are seeing a couple of impacts on the margin. One, as we mentioned, a large kind of a customer moving out. There our model is a bit different than everyone else is. We follow a very diversified kind of approach.

51:45 So while the customer moved out across from five different centers, we prefer to refill those centers. So we are carrying on the fixed assets... Fixed cost around for those centers because we know that we would be able to continue with those centers over the next five to seven years. We'll have to take a minor kind of a shock. Second, specifically with respect to H1, we had been a bit under on margin pressure because a large portion of our portfolio was signed up in 2021. And there was across couple of properties, there was a kind of commercial reset, which was happening after five years. There is a kind of a timing gap between when these... The rental increases on what we pay to the developer or to the space owner versus what we receive from the customer because the customers, everyone has very different kind of renewal cycles. So while we are able to pass on through the increased pricing, but there is, you know, three to four quarters kind of a pricing, a timing difference around on it. So these had been a kind of reason that h one, you're seeing around this way. Overall, h two, we think will outperform h one, And that's primarily the kind of way why we think in the whole of the year, closer to INR 1,800 odd crores with INR 195 crores to INR 200 crores kind of

53:15 cash EBITDA will come around. I am actually hopeful that in Q4, you will see a kind of a meaningful difference around on things. Okay. Thank you, sir. Thank you. Thank you, sir. Ladies and gentlemen, to ask a question, please press star and one now. Ladies and gentlemen, we'll take this as the last question for today. I would now like to hand the conference over to management for closing comments. Do we have a last question, or should we...

54:01 You put it back to me? Sir, for closing comments, I have hand it over to you. Okay. Thank you. So thank you, everyone, for joining us today. To close, I would say the five engines of growth are in place, and the business is in its strongest position yet to come down on this foundation through the whole of FY twenty seven. Should you have any further questions or required clarifications, please feel free to reach out to SGA, our investment relation advisers. And thank you once again, and have a great evening. Thank you, sir. Thank you. Thank you. On behalf of Institutional Equities, that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines. Thank you.