Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil A+/Stable’ rating on the long-term bank facilities of Indiqube Spaces Limited (Indiqube; previously known as Innovent Spaces Private Limited).

 

The rating continues to reflect Indiqube’s healthy business risk profile, driven by its strong market position in the flexible office space segment, established client base across geographies, diversified revenue streams and steadily increasing area under management with healthy occupancy levels. The rating also benefits from healthy operating efficiency on account of efficient rent collection and prudent cost optimisation measures. The rating also takes into consideration the company’s healthy financial risk profile, comfortable debt service coverage ratio (DSCR) and moderate dependence on external debt. These strengths are partially offset by susceptibility to volatility in occupancy levels, and exposure to cyclicality in the real estate sector.

Analytical Approach

Crisil Ratings has considered the standalone business and financial risk profiles of Indiqube.

Key Rating Drivers - Strengths 

Strong market position in the flexible workspace segment: Indiqube is one of the largest flexible workspace platforms in India with an area under management of ~8.70 million square feet (sq ft) in 15 cities with over 750 customers. Indiqube offers flexibility with reasonable capital expenditure (capex) and quick turnaround (typically between 45-60 days) compared to 6-9 months for traditional office spaces. It has rapidly and profitably scaled up operations over the last 5-6 fiscals, while establishing a strong client base with a focus on mid-to-large enterprise clients.

 

Strong and growing customer base, along with unique product offerings, services and facilities are expected to support healthy growth over the medium term. Diversified revenue streams with rental income contributing 75-80% while 20-25% comes from other support and value-added services. Operating margin (as per IGAAP) has shown steady improvement from 14% in fiscal 2023 to 18% in fiscal 2025, while centre level margin sustained at a healthy range. Crisil Ratings expects operating margin to sustain over the medium term, backed by improvement in occupancy levels in the matured and newly launched spaces, scaling up its occupancy within 12 months. However, the sustenance of healthy occupancy levels and operating margins is a key monitorable.

Indiqube has adopted Indian Accounting Standards (Ind AS) in fiscal 2025 and has restated its financials for previous fiscals accordingly. In accordance with Ind AS 116, the company recognized Right of Use (RoU) assets and corresponding lease liabilities to account for future lease payables. This has led to PAT losses due to the interest expense on lease liabilities and depreciation of RoU assets. Despite this, the company has paid the income tax of Rs. 7.67 crore and Rs. 8.42 crore in fiscal 2025 and 2024 respectively as per financials.

 

Diversified client base and healthy occupancy levels: Operations are spread across 15 cities with over 750 clients, which provides healthy revenue diversity and minimises business risk. The client mix of Indiqube leans more towards large and medium enterprises and multinational company (MNC) customers rather than co-working customers. Moreover, it caters to mid-size and enterprise clients only with a lock-in period of at least 2-3 years in most cases, which ensures cash flow stability. Indiqube enjoys 80-85% renewal rates, and an increasing percentage of multi-city deals all while maintaining a steady state occupancy of more than 85%. Indiqube has low-to-moderate client concentration risk as top five tenants contribute less than 15% of rent yielding area. The company is now focusing on increasing its presence across Tier II cities such as Coimbatore, Kochi, Madurai, Vijayawada, Jaipur, Kozhikode and Mohali. Indiqube’s churn rate is relatively lower while several of its existing clients have increased their engagement levels by taking on more space in the same premises or across locations. The rating also factors the well-secured lease structure, with lock-in period of 2-3 years and an in-built revenue escalation clause of over 5% for most tenants.

 

Healthy debt protection metrics: Debt protection metrics (adjusted for lease liabilities) have remained comfortable with expected interest coverage of more than 10 times and net cash accrual to adjusted debt (NCA/AD) of over 2 times for fiscal 2026. Also, average debt service coverage ratio (DSCR) for the residual tenure of the outstanding term loans after considering the lease liabilities have been healthy at 1.54 times with a minimum DSCR of 1.27 times. Financial risk profile is expected to sustain over medium term despite debt funded capital expenditure backed by healthy networth base led by the recent completion of Initial Public Offer (IPO) on July 30, 2025, raising over Rs 650 crore through fresh issue of shares, moderate leverage levels and comfortable accruals. Movement in DSCR and leverage levels shall remain a key monitorable.

Key Rating Drivers - Weaknesses 

Exposure to cyclicality in the real estate sector: Rental collection is the key source of revenue, is susceptible to economic downturns, which constrain the tenant's business risk profile and, therefore, occupancy and rental rates. Indiqube’s lease agreements with landlords are long term (typically of 10-20 years) with a lock-in period of 3-4 years, while contracts with clients are for 3-5 years with a ~3 years lock-in period. The clients could potentially move out on expiry of the contract, which can adversely affect its lease rental income during periods of economic downturns. However, this risk is mitigated by the competitive rates along with value-added services offered by the company, security deposits from clients and the lock-in period in the contract with tenants.

 

Susceptibility to volatility in interest rates and occupancy: Cash inflow remains susceptible to volatility in occupancy levels or realisations (derived from rentals per sq ft), while cash outflow is relatively fixed, except for fluctuations in interest rates (as it is floating). Emergence of competing facilities in the vicinity could also cannibalise tenants or rental rates. Although cash flow will be able to absorb the impact of fluctuations in interest rates and occupancy, these will remain as rating sensitivity factors.

Liquidity  Strong

The DSCR is expected to be around 1.54 times with a minimum of 1.27 times throughout the loan tenure. Liquidity is further supported by a debt service reserve account (DSRA) covering two months of debt obligation. Bank limits were utilised moderately at an average of 68% during the 12 months through June 2025. Free cash balance averaged Rs 20 crore over the 12 months through June 2025. Further the proceeds of IPO of more than Rs 400 crore has been parked in fixed deposits for future capex. Indiqube has escrow mechanism in place with the bank, wherein rent from customers is deposited. This provides additional comfort to the lender as debt repayment is backed by stable cash flow. Support from promoters is also available in case of any exigencies.

Outlook Stable

Crisil Ratings believes the credit profile of Indiqube will benefit from its established market position yielding steady cash flow from lease rentals and comfortable financial risk profile.

Rating sensitivity factors

Upward factors:

• Better-than-expected improvement in operational performance metrics coupled with sustenance of risk mitigating practices and progressive reduction in concentration in any one of the micro markets.
• Improvement in financial risk profile resulting in average adjusted DSCR and minimum adjusted DSCR improving to 2.1 and 1.5 times, respectively.

 

Downward factors:

• Significantly weaker-than-expected operational performance metrics with occupancy levels below 75% or material deviations from risk mitigating practices.
• Higher-than-expected reliance on external debt to fund expansions or average and minimum adjusted DSCR below 1.40 and 1.10 times, respectively. 

About the Company

Indiqube, incorporated in 2015, is engaged in providing office space, catering to established enterprises and start-ups. Operating under the brand name IndiQube, it offers fully serviced, tech-enabled co-working and managed office spaces at value pricing and zero capex. It currently operates around 8.70 million sq ft area with more than 750+ clients across 15 cities in the country. Indiqube has its headquarters in Bengaluru and is promoted by Mr Rishi Das, Ms Meghna Agarwal and Mr Anshuman Das.

Key Financial Indicators*

As on / for the period ended March 31	Unit	2025	2024
Operating income	Rs crore	1075.31	847.36
Reported profit after tax (PAT)	Rs crore	(139.62)	(341.51)
PAT margin	%	(12.98)	(40.30)
Adjusted debt (including lease liabilities)/adjusted networth	Times	(382.72)	24.98
Interest coverage	Times	2.00	2.08

*As per Ind AS

Any other information: Not applicable