ICRA upgrades WeWork credit rating on debt repayment
ICRA Ratings has upgraded the credit rating of WeWork India Management, a leading premium flexible workspace operator, to [ICRA] A-’ with a positive outlook.
The stable outlook on the rating reflects ICRA’s expectation that the company would sustain healthy occupancy and operating profits, supported by large and diversified presence across key markets and estimated improvement in debt protection metrics.
The rating upgrade for WeWork factors in substantial improvement in leverage and coverage metrics post the infusion of fresh capital of ₹501 crore by way of a Rights Issue by Embassy Buildcon LLP in January.
The proceeds from equity infusion were used for redemption of non-convertible debentures of ₹450 crore, which along with an estimated increase in operating profits will result in an improvement in debt protection metrics.
ICRA’s rating upgrade to an ‘A-’ with a positive outlook reflects the company’s focus on driving operational excellence, enhancing customer experiences and strengthening leadership in the co-working space industry.
The revenues of IPO-bound WeWork is expected to grow by 20-25 per cent y-on-y in the near term, as per ICRA Ratings Report.
WeWork’s revenues are expected to grow by strong double digit YoY in the near term due to the addition of new desk capacities at healthy occupancy levels, supported by demand for coworking spaces and the consequent improvement in operating profits, as per ICRA.
WeWork India posted a 26 per cent increase in the last fiscal Operating Income at ₹1,662 crore (₹1,314 crore in FY23) with OPBDIT of 63 per cent in FY24.
WeWork India has over 1 lakh desks at 62 locations spread across seven cities as of December. The company’s desk capacity rose by 20 per cent and 10 per cent y-on-y in FY2024 and H1 FY2025 respectively and the occupancy levels stood at 75 per cent as of last September.
Further, the company has low customer concentration risk, wherein the top 10 clients contributed to over 20 per cent of the total revenue last fiscal and H1 FY’25.
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