Strong growth delivery; margin hedges temper near-term; multi-year 25k-seat vision intact

Delivered revenue INR767.8 Cr, YoY growth 33.6% — beat guidance

NPM delivered 2.6%, OPM 63.8%; accounting divergence vs call narrative suggests Ind AS 116 lease impact

Exceeds prior INR3,363 Cr backlog guidance by INR480 Cr (14% upside)

Strong absorption of added capacity; 11.7k desks added in Q2. Ahead of prior capacity guidance

Exceptional returns in context of highest capex deployment. Delivery on capital efficiency claim credible

Contracted revenue backlog INR3,363 Cr (Q1) → INR3,843 Cr (Q2). 28-month average term extended; run-rate adds INR3 contracted value per INR1 rent.

H1 INR30 Cr customization (INR15 Cr/quarter average). On target vs prior INR10–15 Cr/quarter guidance. Large amortization underway (smoothing revenue stream).

FY27 guidance maintained 500–600 Cr; FY28 now 'potentially INR600+ Cr or maybe slightly more' for large managed office deals. Full-year capex track implies deceleration in H2 vs H1.

New explicit guidance for FY28 PAT margin. Range reflects macro uncertainty, cost inflation (wage +60%, energy tariffs), and margin discipline. Structural margin ex-costs ≈30%.

Youngest cohort (opened <12 months) occupancy up 1,340 bps YoY. Mature centres 87.7% (up 355 bps). Absorption accelerating; mature-centre margin offset by growth-centre capex.

Commonwealth Bank of Australia taking large campus portion in-house (Manyata). Long-time customer (7 years). Backfill from waitlist to follow, but timing and scale create near-term volatility.

Capex multiples up due to managed office capex, but revenue-to-rent rising (3x vs 2.7x before). Assets locked in long term (managed office) at higher capex but better returns. Pricing held; efficiency improving as occupancy ramps.

Renewal rates 80–85%; escalations 6–7% on average. Larger accounts renewing at higher revenue-to-rent multiples (3x vs 2.7x). Flex occupancy 24%, pricing stable, churn lower than expected.

Customization revenue ~INR30 Cr in H1 (INR15 Cr/quarter). Large deals amortized over time. Flow-through improving as occupancy ramps. Small short-term customizations plus 1–2 large deals; smoothing revenue.

GCCs now 40% of demand. Conversations on moving jobs from US/Wipro/PwC to India; talent management and cost control driving GCC growth. New global businesses setting up in India (Blackstone, Revantage). AI/tech talent concentration in India.

Renewals: minimal reinvestment unless space upgrade. Large managed office deals: dedicated capex spread over 5–10 years, not front-loaded. Depreciation increasing; PAT margins 7–10% guidance as depreciation cycles. 1.2–1.5x FCFO to EBITDA range sustainable due to security deposits, customization uplift.

PAT margin guidance 20–23% next year. Wage inflation 60% (Karnataka), energy tariffs up (BESCOM). Opex cost per sqft up significantly. Despite cost hits, margin maintained/improved via pricing hold and efficiency. Structural margin (ex-costs) ~30% at centre level.

March 2027: 150k–155k desks. Already at 150k as of Oct 5. 95% visibility next 12 months; 70–80% visibility 18–24 months. 2+ million sq ft in LOI/signed leases; 38k seats incremental. Waitlist to absorb. Not rushing FY28 capacity; demand-led growth.

Renewal rates 80–85%; average term 28 months. Some churn: Commonwealth Bank of Australia (1.2M sq ft internal campus move-out). Backfill underway (London, Manyata). No deep concentration; GCC/Fortune 500 mix diverse. Offset by new large contracts signed.

H1 INR175.8 Cr capex (largest deployment). H2 expected lower (500–600 Cr full year). FY28 'possibly INR600+ Cr' for large managed office deal signed. Capex cycle now live; base becoming larger, stronger. Platform expansion and adjacent businesses under review (talent, space ops).

Pledge continues to hold due to market volatility. Plan to close as soon as possible via external sale, block sale, or dividend. 100% aware of impact on valuations. Not in hurry; business growing faster than cost of capital. No definite timing.

Guidance beaten. Q2 +33.6% YoY well ahead of 20%+ target. Annualized trajectory suggests FY27 ~30% growth if run-rate holds.

Hedged range reflects cost inflation (wage 60%, energy tariffs), capex depreciation, and macro uncertainty. Structural centre-level margin ~30%; corporate costs drag net margin.

Guidance beaten significantly. But accounting divergence (Ind AS 116) means call narrative may overstate delivered EBITDA on reported basis.

H1 INR175.8 Cr deployed; on track 500–600 Cr full year. Largest deployment cycle.

One large managed office deal signed (deployment next 12–18 months) drives H2 capex and FY28 elevation. Largest deal in history. Not rushing FY28 supply.

GCC 41% of mix; Fortune 500 30%; Top 10 accounts 23% of revenue. Commonwealth Bank of Australia (7-year customer, 1.2M sq ft) moving to internal campus. Renewal risk if macro softens.

Wage inflation 60% (Karnataka), energy tariffs up (BESCOM), depreciation rising from capex cycle. Pricing hold (not escalating) limits offset. PAT margin guidance 20–23% implies near-term pressure despite 30%+ structural centre margin.

11.7k desks added Q2; growth centres occupancy only 64.8% (up from 51.4% YoY). If ramp slower, capex ROI defers; ROCE stays pressured. Largest managed office deal now signed; massive deployment next 12–18 months compounds risk.

Strong demand narrative (GCC expansion, AI hiring) could reverse if macro softens. Flex space is cyclical; occupancy expansion could decelerate. Renewal pricing power may decline.

Call describes H1 PAT INR119 Cr (8.1% NPM), but Q2 delivered PAT INR20.4 Cr (2.6% NPM). Gap likely due to lease accounting (Ind AS 116) on P&L in call vs off-P&L in reported. Investors may be confused by narrative.