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    INDIQUBE

    INDIQUBE
    Services·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

    5

    • 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

    2

    • 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.

    What Changed2

    vs Q2 FY26

    Guidance items11 → 6 (-5)Risks discussed1 → 2 (+1)

    Key financials

    Single quarter

    12 metrics
    1. 01Revenue₹313 Cr+27%YoY
    2. 02EBITDA₹65 Cr+98%YoY
    3. 03EBITDA Margin21%+7.4%YoY
    4. 04PAT₹18.5 Cr+3.0%YoY
    5. 05PAT Margin6%+4%YoY

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Guidance & targets

    6
    CategoryTargetPriority
    Revenue
    Revenue Growth
    30%
    		High
    Margin
    EBITDA Margin
    21%
    		High
    Area Under Management
    Headroom Operationalization
    2.2 million sq ft
    		High
    Area Under Management
    Area Addition
    1.5 million sq ft
    		Medium
    CAPEX
    CAPEX per square foot
    ₹1,500
    		High
    Value Added Services
    Recurring VAS Revenue Growth
    10-15%
    		Medium

    Steady State Occupancy Improvement

    next quarter
    Current87%
    TargetImprovement 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.

    How to verify

    key_financials.metrics[label='Occupancy']

    Risks & concerns

    2
    RiskSeverity

    Temporary dip in steady state occupancy

    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. — Management acknowledged

    low

    IT sector slowdown impact on demand

    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. — Analyst downplayed

    low

    Q&A highlights

    8

    “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

    3 min read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.