In a stark contrast to its revenue trajectory, OYO-backed managed workspaces provider Innov8 has witnessed its profit after tax (PAT) crater 97% to ₹1.2 crore in FY25, down from ₹44 crore in FY24, primarily due to a sharp escalation in expenses. This downturn occurred even as the company’s operating revenue rocketed 117% year-on-year to ₹114.5 crore from ₹52.7 crore, driven by robust demand for flexible office spaces across India’s Tier-1 and Tier-2 cities. Innov8, formerly OYO Workspaces India Pvt Ltd and acquired by OYO in 2019 for ₹220 crore, now operates 42 centers with over 13,000 seats in nine cities, including Delhi-NCR, Mumbai, and Bangalore.
For investors monitoring OYO’s portfolio as it gears up for an IPO, real estate professionals tracking the coworking boom, and entrepreneurs eyeing the $10 billion Indian flexible workspace market, Innov8’s mixed FY25 results highlight the high-growth, high-cost dynamics of post-pandemic expansion. With EBITDA up 76% to ₹30 crore (24% margin), the path to profitability remains viable but challenged. Let’s break down the financials, key drivers, and future outlook.
Financial Snapshot: Revenue Surge vs. Profit Squeeze
Innov8’s top line swelled on the back of rental income (₹109 crore) and ancillary revenues like food and beverages (₹16.4 lakh), pushing total income to ₹117.5 crore including other sources (₹3.1 crore). However, expenses ballooned, eroding gains at the bottom line.
Key metrics at a glance:
| Metric | FY25 (₹ Cr) | FY24 (₹ Cr) | YoY Change (%) |
|---|---|---|---|
| Operating Revenue | 114.5 | 52.7 | +117 |
| Total Income | 117.5 | N/A | N/A |
| EBITDA | 30 | 17 | +76 |
| EBITDA Margin | 24% | N/A | Improved |
| Profit After Tax (PAT) | 1.2 | 44 | -97 |
The PAT nosedive stems from elevated operational costs, including center expansions and marketing, despite positive EBITDA momentum. OYO holds an 88.3% stake in Innov8, with board representation from OYO executives like CFO Rakesh Kumar, tying its fortunes to the parent company’s IPO-bound growth.
Drivers Behind the Profit Fall: Expansion Costs in a Booming Market
The coworking sector’s post-COVID resurgence—fueled by hybrid work models and startup influx—propelled Innov8’s revenue, with occupancy rates exceeding 90% across centers. Founded in 2015 by Ritesh Malik, the company has scaled to 42 live centers (plus 12 in pipeline), targeting 62 by year-end, spanning Delhi-NCR, Mumbai, Pune, Chennai, Bangalore, Ahmedabad, Hyderabad, and Indore.
Yet, aggressive growth bit back:
- Expense Explosion: Total costs likely surged on new center fit-outs, employee hires, and tech upgrades for managed spaces—common in a sector where capex can outpace revenues early on.
- One-Time Factors: While FY24’s ₹44 crore PAT included exceptional items, FY25’s leaner figure reflects normalized ops amid rising interest and admin expenses.
- Market Pressures: Broader realty inflation and competition from WeWork India (which turned profitable in FY25 with ₹128 crore PAT) squeezed margins temporarily.
Q1 FY26 shows recovery signs: IND GAAP EBITDA hit ₹7.5 crore (189% YoY growth from ₹2.6 crore), signaling momentum as expansions stabilize.
OYO’s Broader Context: IPO Push Amid Portfolio Tweaks
OYO’s FY25 was stellar—PAT up 2.7x to ₹623 crore and revenue at ₹6,463 crore (20% growth)—positioning it as India’s “most profitable startup.” Innov8’s dip is a minor blip in this narrative, but it underscores diversification risks as OYO eyes listing (bonus shares 1:1, ESOP pool expansion).
Recent moves like Innov8’s June 2025 stake sale (3% for ₹1,000 crore valuation) and January’s ₹110 crore raise highlight funding for 3x seat growth to 50,000 by 2025-end, shifting to larger centers. This positions Innov8 to capture the $10B flexible workspace pie, projected to grow 20% annually.
Implications: Growth Pains or Path to Scale?
For OYO and Investors: Innov8’s revenue surge validates the 2019 acquisition, but PAT volatility could flag in IPO scrutiny. With OYO’s adjusted EBITDA at ₹1,132 crore (27% up), the coworking arm contributes to diversified revenue streams.
Sector Outlook: Coworking’s 90%+ occupancies signal demand, but expense discipline is key—WeWork India’s FY25 profitability (₹128 crore) sets a benchmark. Innov8’s plans for 4 million sq ft addition over three years could triple capacity, but capex control will decide if FY26 rebounds to ₹50+ crore PAT. inc 42
