Just as WeWork India’s Rs 3,000 crore IPO entered its third day of bidding on Tuesday, October 7, governance advisory firm InGovern flagged concerns regarding the company’s weak financials, lack of transparency in disclosures, and high costs. The development gains significance given that the company is set to debut on the bourses in 2 days, on October 10.
According to the analysis by InGovern, the company has consistently reported negative cash flows, and its lease costs account for more than 43% of its revenue from operations. The reported profit in FY25 is largely due to a deferred tax credit, and not operational profitability.
The analysis also flagged concerns regarding governance practices, specifically pertaining to promoter share pledges. To be sure, a large chunk of shares held by Embassy Buildcon were pledged pre-IPO for borrowing. While they’ve been released, the norms require the shares to be repledged if there’s a delay in IPO listing. This impacts promoter control and signals investor concerns.
In the grey market, WeWork India shares are trading at a premium of Rs 5 or about 0.77% over the issue price of Rs 648. This suggests a possible listing price around Rs 653, indicating modest investor optimism in unofficial pre-listing activity.
WeWork India’s Rs 3,000-crore Initial Public Offering (IPO) comprises 4.62 crore equity shares and is entirely structured as an Offer for Sale (OFS). This means the company will not receive any proceeds from the issue; instead, the funds will go to existing shareholders, including Embassy Group and WeWork Global, who are partially offloading their stakes.
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The IPO valuation reflects a premium. At the upper end of the price band, the offer is priced at 65 times FY25 earnings. In comparison, listed peer Awfis Space is currently trading at a P/E ratio of 58x, while other sector players like Smartworks and Indiqube have yet to achieve profitability.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
According to the analysis by InGovern, the company has consistently reported negative cash flows, and its lease costs account for more than 43% of its revenue from operations. The reported profit in FY25 is largely due to a deferred tax credit, and not operational profitability.
The analysis also flagged concerns regarding governance practices, specifically pertaining to promoter share pledges. To be sure, a large chunk of shares held by Embassy Buildcon were pledged pre-IPO for borrowing. While they’ve been released, the norms require the shares to be repledged if there’s a delay in IPO listing. This impacts promoter control and signals investor concerns.
In the grey market, WeWork India shares are trading at a premium of Rs 5 or about 0.77% over the issue price of Rs 648. This suggests a possible listing price around Rs 653, indicating modest investor optimism in unofficial pre-listing activity.
WeWork India’s Rs 3,000-crore Initial Public Offering (IPO) comprises 4.62 crore equity shares and is entirely structured as an Offer for Sale (OFS). This means the company will not receive any proceeds from the issue; instead, the funds will go to existing shareholders, including Embassy Group and WeWork Global, who are partially offloading their stakes.
Also read| LG vs Tata Capital: What should you pick as IPO battle heats up?
The IPO valuation reflects a premium. At the upper end of the price band, the offer is priced at 65 times FY25 earnings. In comparison, listed peer Awfis Space is currently trading at a P/E ratio of 58x, while other sector players like Smartworks and Indiqube have yet to achieve profitability.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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