IPO-Bound Startup Posts First-Ever Profit, Operating Revenue Up 17%
In a significant milestone ahead of its initial public offering (IPO), WeWork India has reported its first-ever profitable fiscal year in FY25, posting a profit after tax (PAT) of INR 128.2 crore. This marks a turnaround from a loss of INR 135.7 crore in the previous fiscal year (FY24), according to the startup’s recent filings with the Ministry of Corporate Affairs (MCA).
However, a closer look at the numbers reveals that this profitability is largely attributed to a deferred tax gain of INR 285.7 crore, a sharp increase from just INR 34.2 lakh in FY24. Excluding this one-time gain, WeWork India remains in the red, with a loss before tax (LBT) of INR 156.7 crore, compared to a loss of INR 136 crore in FY24.
Revenue Growth Continues, But Operating Losses Persist
Despite the concerns around profitability, WeWork India has demonstrated solid growth in revenue, with operating revenue rising 17% year-on-year to INR 1,949.2 crore in FY25, up from INR 1,665.1 crore in FY24. This indicates strong demand for flexible workspaces in India, a segment that has gained momentum post-pandemic.
Yet, the company’s growing losses before tax raise concerns about its operational efficiency. The increase in losses despite higher revenues suggests that costs continue to outpace gains, putting pressure on margins.
IPO Plans Progress Amid Profitability Questions
The company’s FY25 financials were disclosed just a month after the Securities and Exchange Board of India (SEBI) approved its draft red herring prospectus (DRHP). WeWork India’s upcoming IPO will be a pure offer-for-sale (OFS) of up to 4.4 crore equity shares, meaning no fresh capital will be raised.
The IPO is being closely watched, especially as it follows a troubled period for the global WeWork brand, which filed for bankruptcy in the U.S. in 2023. However, WeWork India operates independently and is majority-owned by the Embassy Group, a leading real estate developer.
Deferred Tax Gain: A Temporary Boost?
While the reported profit has generated headlines, analysts caution that the INR 285.7 crore deferred tax gain is a non-operating accounting adjustment, not a reflection of core business performance. Such tax gains, while legitimate, do not indicate long-term profitability, especially when the company continues to report pre-tax losses.
This raises critical questions for potential investors: Can WeWork India sustain profitability without relying on such one-off gains?
Conclusion
WeWork India’s FY25 results are a mixed bag—on one hand, it’s the company’s first-ever profit, boosted by strong revenue growth and a deferred tax gain. On the other, its rising loss before tax and dependence on non-operational income raise red flags ahead of its IPO.
As India’s coworking space market continues to expand, WeWork India has a strategic opportunity to lead. However, long-term profitability and operational efficiency will be key metrics investors will scrutinize as the IPO date approaches.
