Indiqube Spaces Limited — Q1 FY26 earnings call

Call held 13 Aug 2025

Management summary

IndiQube reported a strong Q1 FY26, driven by robust revenue growth and significant margin expansion, reflecting effective operational leverage. The company expanded its Area Under Management and improved occupancy, while also making strides in sustainability. Management expressed confidence in maintaining growth trajectory and further margin improvement, despite a temporary dip in steady-state occupancy due to new property integrations.

Highlights

  • Revenue grew 27% YoY to ₹313 crores, with 98% being recurring, indicating strong revenue quality.

  • EBITDA saw a significant 98% YoY increase to ₹65 crores, leading to a 743 bps expansion in EBITDA margin to 21%.

  • Profit After Tax (PAT) nearly tripled to ₹18.5 crores, and annualized EPS grew to ₹4.1 from ₹1 in Q1 FY25.

  • Area Under Management expanded by 1 million sq ft YoY to 8.7 million sq ft, adding 17 new centers and entering 2 new cities.

  • Occupancy improved to 85% from 81% last year, with 2.2 million sq ft of headroom expected to become operational in the next 6-12 months.

Concerns

  • A temporary dip in steady state occupancy from 91% last year to 87% this year was noted, attributed to the integration of newly renovated properties.

  • A difference exists between IGAAP EBITDA (₹65 crores) and Adjusted Cash EBIT (₹52 crores) due to accounting standards for pre-operating expenses and financial leases.

Key financials

  1. Revenue ₹313 Cr +27%YoY
  2. EBITDA ₹65 Cr +98%YoY
  3. EBITDA Margin 21% +7.4%YoY
  4. PAT ₹18.5 Cr +297.8%YoY
  5. PAT Margin 6% +4%YoY
  6. Annualized EPS ₹4.1 +310%YoY
  7. Adjusted Cash EBIT ₹52 Cr +85%YoY
  8. Net Worth ₹395 Cr
  9. ROE 27% +19%YoY
  10. Area Under Management 8.7 million sq ft
  11. Rent Paying Area 6.5 million sq ft
  12. Occupancy 85% +4%YoY

What they filed

Q1 FY27: revenue up 36.9%, net profit up 35.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue252 268 297 309 350 +39%390 +46%401 +35%423 +37%
EBITDA145 158 170 188 208 +43%237 +50%248 +46%258 +37%
Net profit-53 -14 -31 -37 -30 +43%-17 −21%-23 +26%-24 +35%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Revenue

  • Revenue Growth Revenue · ongoing · High confidence 30%
    And if we look at the revenue, typically, like we have been growing, consistently delivered a 30% year-on-year revenue growth. And we expect to maintain a similar trajectory, which will be supported by the new center additions and improved occupancy.

    — Rishi Das

Margin

  • EBITDA Margin Margin · upcoming quarters · High confidence 21%
    I would say we expect the similar kind of margin improvement, similar in overall basis, in the range of 21%, what we have shown in the first quarter itself. That is, we kind of will maintain the similar momentum in the upcoming quarters.

    — Meghna Agarwal

Area Under Management

  • Headroom Operationalization Area Under Management · next 6-12 months · High confidence 2.2 million sq ft
    we have over 2.2 million square feet of headroom for growth that is expected to become operational for the next 6 months to 12 months.

    — Meghna Agarwal

  • Area Addition Area Under Management · annually · Medium confidence 1.5 million sq ft
    Yes. And in terms of area additions, I said, it is like going up to like what, 1.5 million square feet. That is what we have been doing in the last few years.

    — Meghna Agarwal

CAPEX

  • CAPEX per square foot CAPEX · future · High confidence ₹1,500
    So, in future also, we see that Rs. 1,500 remaining almost in the similar bracket.

    — Meghna Agarwal

Value Added Services

  • Recurring VAS Revenue Growth Value Added Services · next coming quarters · Medium confidence 10-15%
    And similar, what we have done so far, 10% to 15% will be doing in the next coming quarters also in the similar range.

    — Meghna Agarwal

What to watch in Q2 FY26

Steady State Occupancy Improvement

next quarter
Current 87%
Target Improvement from Sep-Oct onwards

Why it matters

Improvement in steady state occupancy is crucial for revenue growth and margin expansion, as it addresses the temporary dip observed this quarter.

Over the next couple of quarters, we should see an improvement in the steady state center occupancy, once the tenant rental starts kicking in, basically, from September - October onwards.

Risks & concerns

  • Temporary dip in steady state occupancy

    low

    Steady state occupancy dipped from 91% last year to 87% this year due to the addition of 3 renovated properties (2.5 lakh sq ft) in FY23-FY24, with active leasing starting in the last financial year. Management expects improvement from September-October onwards.

    And as a result, you see this, the steady state center occupancy has taken a bit of a dip. Now, these properties have picked up leasing traction. Over the next couple of quarters, we should see an improvement in the steady state center occupancy, once the tenant rental starts kicking in, basically, from September - October onwards.

    Management acknowledged

  • IT sector slowdown impact on demand

    low

    Analyst raised concerns about the IT sector slowdown and layoffs impacting demand. Management responded by highlighting the resilience of mid-cap IT, the strong growth of Indian companies, and the fact that top NASSCOM companies often have their own campuses, limiting their participation in the leased office market.

    if you look at, the mid cap IT is doing better than the large cap IT. And a lot of our IT services companies of Indian origin are mid-cap IT services companies. That is one. Second thing is, if you look at the top IT companies in India, the big five, the NASSCOM big five or big ten, most of these people actually do not participate in the leasing market very actively, office leasing market.

    Analyst downplayed

Q&A highlights

7 direct
Area addition and Bengaluru market share Direct
So, as outlined in Slide #16, our FY '26 area under management stands at 8.7 million square feet, while our rent paying area is currently about 6.5. So, this already leaves us with a headroom of 2.2, which I was talking earlier in my this thing, that is about 30% based on the 6.5 million square feet. Most of this area will be available for occupancy or for leasing in the next 9 months to 12 months.

Clarifies the company's growth pipeline and the proportion of future operational space, along with the strategy for Bengaluru's share in the portfolio.

Asked by Mohit Agrawal

Margin expansion and convergence of IGAAP vs Cash EBIT Partial
Margin expansion from 13% to 18% and then from 18% to 21%. All right. So when you come to 13% to 18%, our occupancy has increased from 81% to 85%, which has been clearly depicted on the investor presentation. That has helped us in increasing the margins. Having said that, while quarterly fluctuations in this occupancy are natural due to the new building additions or ramp ups.

Explains the drivers behind the significant margin improvement and addresses the accounting differences between IGAAP and Cash EBIT, indicating a future convergence as the base grows.

Asked by Mohit Agrawal

Managed Accreditation (MA) model and sourcing strategy Direct
And for some of the markets, which are Tier II cities or some of the micro markets, which are basically very new, where we do not have a very, very consistent track record. Those micro markets, to minimize our entry risk, we are exploring the Managed Accreditation Model as well over there, typically.

Reveals the company's flexible sourcing strategy, including the selective use of asset-light models for higher-risk markets, demonstrating adaptability.

Asked by Shivkumar Prajapati

Client mix, IT sector risk, and direct client acquisition Direct
So, basically, as you rightly highlighted that 40% of our clients are mobile capability centers. Now, 60% are the clients which are typically of Indian origin. Now, we have almost equal mix of all the three segments. There are three types of clients in this. One are basically the IT services companies, as you said. The second segment, which is growing very fast post COVID is the Indian companies.

Provides a detailed breakdown of the client base, addressing concerns about IT sector slowdown by highlighting diversification and the resilience of Indian commercial real estate.

Asked by Shivkumar Prajapati

Reconciliation of AUM, Rentable Area, and Occupied Area Direct
No. So you are spot on, Murtuza, that the rent paying area is 6.5. So, we are paying rent only on 6.5 million. We are not paying rent on the entire 8.7. And this 2.2 million delta that you see are the spaces where we have signed up, where we have given them some part of the commitment fee, the security deposits. And they will be getting handed over between 6 months to 12 months.

Clarifies the definitions of key operational metrics and the pipeline for future revenue-generating space.

Asked by Murtuza

CAPEX strategy and cost per square foot Direct
CAPEX has been Rs. 1,500 per square feet. So, the thing, what we have done is, this has been, I would say, average Rs. 1,500 throughout the years. But the cost is not increased, but the quality is increased. So, what we have done, instead of reducing our CAPEX cost from Rs. 1,500, so there was a conscious call as a management. Instead of doing Rs. 1,500 to Rs. 1,400, can we improve our quality in Rs. 1,500? So, similar product can be enhanced.

Explains the company's capital allocation strategy for fit-outs and renovations, focusing on quality enhancement rather than cost reduction, and its impact on EBITDA margins.

Asked by Girish Choudhary

Free Cash Flow calculation Direct
Yes, hi. So, our free cash flow for this quarter is around Rs. 35 crores. So, on the basis of cash EBITDA of Rs. 52 crores, we have subtracted our interest cost and tax amount. And we have added back our non-cash item. On the basis of that, our free cash flow for this quarter is Rs. 35 crores.

Provides a clear quantification of the company's free cash flow for the quarter and its derivation from cash EBITDA.

Asked by Kshitij Saraf

Revenue to Rent Multiplier and Value Added Services (VAS) Direct
Yes. So, first, we have to look at the same slide. You have to look at the 32 slides. We have divided our value added services into two components. One is your reoccurring and one is your one-time. So, if you see my re-offering, the revenue has been increasing on a year basis 35% and quarter-on-quarter is about 12.5%.

Addresses the company's revenue to rent ratio compared to peers and details the growth strategy for value-added services, emphasizing recurring revenue.

Asked by Shivkumar Prajapati

3 min read 6 chapters

Detailed narrative

Robust Financial Performance in Q1 FY26

IndiQube reported a strong start to FY26 with revenue reaching ₹313 crores, marking a 27% year-on-year growth, with 98% of this revenue being recurring. EBITDA surged by 98% YoY to ₹65 crores, leading to a significant 743 basis points expansion in EBITDA margin, which now stands at 21%. Profit After Tax (PAT) nearly tripled to ₹18.5 crores from ₹4.6 crores in Q1 FY25, and annualized EPS grew to ₹4.1 from ₹1, demonstrating strong profitability and operational efficiency.

Operational Expansion and Occupancy Trends

The company's Area Under Management (AUM) expanded to 8.7 million square feet across 120 centers in 15 cities, an increase of nearly 1 million square feet and 17 new centers compared to Q1 FY25. Occupancy improved to 85% from 81% last year, with 2.2 million square feet of headroom expected to become operational in the next 6-12 months. A temporary dip in steady state occupancy to 87% from 91% was noted, attributed to the integration of 2.5 lakh sq ft from 3 newly renovated properties, with improvement expected from September-October onwards.

Strategic Client Mix and Market Share

IndiQube serves 789 clients, comprising 40% GCCs and 60% Indian companies, with 60% of clients acquired directly. Clients occupying over 300 seats account for 64% of total occupancy. The company holds a significant market share of approximately 21% in Bengaluru (5.7 million sq ft out of 27 million sq ft total stock) and 18-20% in Chennai (1.2 million sq ft out of 6.5-7.5 million sq ft total stock). While Bengaluru's share in the overall portfolio has reduced from 90% to 65%, other cities like Hyderabad and Coimbatore have seen substantial growth.

Margin Expansion and Operational Leverage

The expansion in EBITDA margin to 21% was driven by two phases: an increase from 13% to 18% due to improved occupancy (81% to 85%), and a further increase to 21% due to 4% QoQ revenue growth with flat operating costs, showcasing strong operational leverage. Management expects to maintain margins around 21% in upcoming quarters. The difference between IGAAP EBITDA (₹65 crores) and Adjusted Cash EBIT (₹52 crores) is primarily due to financial leases and the capitalization of pre-operating expenses under IGAAP, which are expensed in cash EBIT.

Capital Expenditure and Sustainability Initiatives

The company maintains an average CAPEX of ₹1,500 per square foot, with a focus on enhancing quality rather than reducing cost. This blended CAPEX includes new fit-outs and renovations, with renovated properties (30% of portfolio) offering better EBITDA margins (20-25% cheaper than market rate). IndiQube is committed to sustainability, having commissioned the first phase of a 20 MW solar farm in Karnataka (10 MW energized) in May 2025, which generated 9.8 lakh units of green power in June, saving ₹68 lakh monthly.

Value-Added Services (VAS) Growth

Income from ancillary activities, primarily Value-Added Services (VAS), contributed ₹34 crores in Q1 FY26, representing about 10% of overall revenue. VAS includes services like Design & Build (DNB), food, and transport, catering to both IndiQube and non-IndiQube clients. The recurring VAS revenue has been growing at 35% YoY and 12.5% QoQ, and management aims to maintain a similar growth trajectory of 10-15% in the upcoming quarters, focusing on the recurring segment.

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