Dev Accelerator Coworking Spaces IPO Subscribed 0.52x on Day 1: Should You Invest?

About the Issue:

Dev Accelerator has launched a book-built issue worth Rs 143.35 crore, consisting entirely of a fresh issue of 2.35 crore equity shares. There is no offer-for-sale (OFS) component, meaning all proceeds will flow directly into the company for growth initiatives.

The IPO bidding window opened on September 10, 2025 and will close on September 12, 2025. The basis of allotment is scheduled for September 15, 2025, with shares expected to list on both the BSE and NSE on September 17, 2025.

The book running lead manager to the issue is Pantomath Capital Advisors Pvt. Ltd., and Kfin Technologies Ltd. is the registrar.

See details below:

Objects of the Issue and Promoter Details

The net proceeds from the IPO will be used for the following purposes:

1. Capital expenditure for fit-outs in new centres and security deposits – Rs 73.12 crore.
2. Repayment and pre-payment of borrowings, including redemption of NCDs – Rs 35 crore.
3. General corporate purposes, supporting expansion and working capital needs.

By allocating a large chunk to expansion, DevX is signalling its intent to aggressively strengthen its presence across Tier-1 and Tier-2 markets.

The company is promoted by Parth Shah, Rushit Shah, Umesh Uttamchandani, and Dev Information Technology Limited. Post-issue, the promoter shareholding will decline from 49.80per cent to 36.80per cent, reflecting equity dilution through fresh capital infusion rather than an offer for sale (OFS)—a move generally seen as positive since promoters are not encashing their stake but instead channelling funds into the company’s future growth.

Company Profile

Founded in 2017, Dev Accelerator (DevX) has rapidly scaled to become one of India’s largest flexible workspace and managed office operators, with a strong focus on Tier-2 markets. As of May 31, 2025, the company operates 28 centres across 11 cities including Delhi NCR, Hyderabad, Mumbai, Pune, Ahmedabad, Gandhinagar, Jaipur, Udaipur, Indore, Rajkot, and Vadodara. Together, these centres provide 14,144 seats spread over 860,522 sq. ft., serving a diverse base of more than 250 clients ranging from large corporates and Global Capability Centres (GCCs) to SMEs.

DevX sets itself apart with its enterprise-grade, customised managed office model, while also offering coworking solutions tailored for SMEs and start-ups. Its business model spans end-to-end design, fit-outs, and turnkey office solutions, as well as facility and property management services. The company further enhances its value proposition through IT and HR/payroll support provided by its subsidiary Saasjoy Solutions, and by entering into strategic OpCo–PropCo partnerships and landlord collaborations. This integrated ecosystem approach allows DevX to position itself as a single-partner solution provider, fostering higher client stickiness and long-term relationships.

Industry Outlook 

The Indian flexible workspace industry has rapidly emerged as a major disruptor in the country’s office real estate market. Flex space stock has expanded from 18.6 million sq. ft. in 2018 to 74 million sq. ft. in 2024, registering a strong CAGR of 26per cent. This momentum is expected to continue, with operational flex stock projected to double to 129 million sq. ft. by 2028. Penetration levels, which stood at just 3per cent in 2020, have already climbed to 7.3per cent as of March 2025 and are estimated to touch 8–9per cent over the next five years. Growth is being fuelled by three key demand drivers. First, Global Capability Centres (GCCs), which accounted for 36per cent of leasing activity in 2024 and are projected to occupy over 300 million sq. ft. in the next three years. Second, Tier-2 markets, where flexible workspace stock has grown nearly nine-fold since 2018, highlighting the decentralisation of corporate hubs. Third, the rise of managed space providers, the fastest-growing segment, which has clocked a 54per cent CAGR since 2018, largely driven by enterprise-scale demand. With India’s Grade A office stock expected to grow at a CAGR of 6.7per cent between 2025 and 2027, operators like DevX are well-positioned to ride this wave of expansion.

Financials 

(Source – Company’s RHP)

Balance Sheet Snapshot

(Source – Company’s RHP)

Key Metrics

(Source – Company’s RHP)

Key ratios

(Source – Company’s RHP)

Listed Peer Comparison 

(Source – Company’s RHP)

SWOT Analysis

Strengths

• Tier-2 leadership: Largest operator in smaller cities, a segment seeing explosive growth.
• High occupancy: ~87per cent as of FY25, showing robust demand.
• Integrated platform: End-to-end design, facility, and IT services.
• Client diversity: Over 250 clients including large corporates and GCCs.
• Experienced management team: Founders with deep sectoral expertise.

Weaknesses

• Profitability concerns: Losses in FY23 and thin PAT margins in FY24–25.
• Client concentration: Top 20 clients contribute over 50per cent of revenues.
• Geographic risk: Heavy reliance on Gujarat centres.
• Competition: Trails peers like Awfis and Smartworks in scale.
• Capital intensive model: Fit-outs and leases require significant upfront spend.

Opportunities

• Tier-2 expansion: Growing demand for decentralised offices.
• International markets: First overseas centre planned in Sydney.
• Diversification: Expanding into HR, IT, and facility management services.

Threats

• High attrition: Employee turnover remains a concern.
• Lease liabilities: Fixed costs could pressure margins in downturns.
• Landlord competition: Property owners may shift to revenue-share models

Outlook and Valuation

The book-built issue is priced in the band of Rs 56–Rs 61 per share, comprising a fresh issue of 2.35 crore shares. At the upper price band, Dev Accelerator is valued at around 310x FY25 earnings and 3.5x sales, giving it a post-issue market capitalisation of ~Rs 550 crore. These valuations appear stretched compared with peers such as Awfis Space Solutions, which trades at 81x earnings and 3.2x sales while delivering a stronger return profile.

The company’s fundamentals highlight strengths such as:

• Occupancy levels of nearly 87per cent in FY25, reflecting healthy demand.
• A solid position in Tier-2 cities, a market expected to expand significantly over the next five years.
• Long-term contracts that provide stable revenue visibility.

While these factors signal long-term growth potential, near-term earnings remain muted, making current valuations difficult to justify. The structural opportunity is clear, but the financial performance is yet to catch up with the growth narrative.

Recommendation

Investors may consider Dev Accelerator only once potential starts reflecting in consistent financial performance. At present, the IPO looks expensive relative to peers, with execution risks around expansion weighing on visibility. Avoid for now and adopt a wait-and-watch approach. Better opportunities exist among listed players with more favourable valuations and established profitability.