How WeWork Paved Its Way Back To Investor's Spotlight? ICICI Securities Weighs In

Flexible work space operator WeWork India has regained the attention of investors after its IPO debut last month, especially with brokerage house like ICICI Securities being bullish on the Bengaluru-based firm.

"We initiate coverage with a BUY rating on WeWork India Management and a target price of INR 914. We value the company at a Sep’27E EV of INR 122.4bn, derived from an 18x Sep’27E EV/EBITDA of INR 6.8bn – in line with our target multiple for its listed peers, such as Awfis Space Solutions and Indiqube Spaces Ltd. Adding net cash of INR 0.1bn, as of Sep’27E, we derive an equity value of INR 122.5bn or INR 914/share," ICICI Securities said.

Also Read: The Silent Crisis In Indian Real Estate: The Fading Middle Developer

Are Investors Betting On India’s Office Leasing & Flex-Space Demand?

The recovery in Indian office leasing seen in CY23 has led to a boom for office demand in CY24 with pan-India net absorption of 49msf vs. incremental supply of 43msf, leading to overall "Grade-A vacancy levels declining by 190bps YoY to 16.1%", the brokerage firm noted.

"With continued momentum in office demand, led by GCCs, we estimate pan- India Grade-A net absorption of 54msf in CY25, 56msf in CY26 and 58msf in CY27," it said.

"We expect more than 50% of this demand to be driven by GCCs and envisage cumulative net absorption of 167msf over CY24–27E. At the same time, India has witnessed growth in demand for flexible workspaces with 18–22mn sq.ft. of stock that was added in CY24, it added.

As per CBRE, the total flexible workspace stock, which ranged 82–86mn sq.ft. at end- CY24, is forecast to grow to ~140–144mn sq.ft. across tier-1 cities by end-CY27 at a CAGR of 18–20%.

About WeWork

WeWork is owned and promoted by Embassy, a leading real estate developer in India with a portfolio of >85mn sq.ft. of commercial real estate. Embassy is also the sponsor of Embassy REIT, India’s first REIT and Asia’s largest office REIT by leasable area.WeWork also benefits from its relationship with WeWork Global, a global flexible workspaces operator with ~600 wholly-owned and licensed locations in 35 countries,
and it is the exclusive licensee of the WeWork brand in India.