The rating upgrade for WeWork India Management Limited (WeWork) factors in substantial improvement in leverage and coverage metrics post the infusion of fresh capital of Rs. 501 crores by way of right issue by Embassy Buildcon LLP in January 2025. The proceeds from equity infusion were used for redemption of non-convertible debentures (NCDs) of Rs. 450 crores, which along with an estimated increase in operating profits backed by the sustained healthy occupancy levels on an increased desk capacity will result in an improvement in debt protection metrics.
The company’s desk capacity rose by 20% and 10% YoY in FY2024 and H1 FY2025 respectively, and the occupancy levels stood healthy at 75% as of September 2024. WeWork’s revenues are expected to grow by 20-25% YoY in the near term due to addition of new desk capacities at healthy occupancy levels, supported by demand for coworking spaces and the consequent improvement in operating profits.
The rating takes comfort from the large and diversified presence with around 1 lakh desks (as of December 2024) at 62 locations spread across eight cities such as Bengaluru, Mumbai, Delhi, Gurgaon, Noida, Pune, Chennai and Hyderabad. The rating favorably factors in the low customer concentration risk, wherein the top 10 clients contributed to around 20% of the total revenues in FY2024 and H1 FY2025. ICRA takes note of the extensive experience of its promoters, the Embassy Group, which is one of the largest commercial real estate developers in the country.
