It’s better to explain than resort to optics: IndiQube’s Meghna Agarwal

IndiQube Spaces, a leading managed workspaces player which got went public in July, is choosing transparency over optics. Despite reporting an accounting loss under Ind AS in Q2 FY26, IndiQube cofounder Meghna Agarwal breaks down the accounting anomalies that cloud the true financial picture of real estate–linked service companies, especially those governed by Ind AS 116. Agarwal explains why long-term leases create “notional losses,” what investors often misunderstand about profitability, and how IndiQube’s growth strategy is anchored in sustainable expansion, service innovation, and deep micro-market penetration.

Some companies which have gone recently public have managed “accounting profits”, but you’re showing an accounting loss

Yes, exactly. We’re showing a loss as per Indian accounting standard, but an operational profit under IGAAP. The other company you’re referring to shows profit because they include other income and present it differently. People who really understand and do a deep dive will get what the real mathematics behind this is.

But which method are you actually following Ind AS or IGAAP?

For listed companies, we’re required to follow Ind AS. We can’t follow IGAAP anymore as our auditors prepare everything under Ind AS. But here’s the dichotomy: income tax is calculated under IGAAP, not under Ind AS. How can I pay income tax if I’m incurring a loss? It’s because income tax is based on IGAAP, which doesn’t include all these notional accounting entries. Especially in real estate, this becomes tricky. Under Ind AS 116, long-term leases are treated differently. Ideally, we should get the benefit of locking in long leases, but instead we’re being penalised for it.

Let me explain. Suppose we sign a 20-year lease. Rents usually escalate every three or five years. Say we pay ₹100 now, then ₹200, then ₹300, and so on. Over 20 years, we might pay ₹2,000 in total. Under Ind AS, it takes that total rent and divides it equally across the years, a straight-line accounting treatment. So, in the early years, it shows a huge rent outflow even though that money isn’t actually being paid now. It’s all notional.

Think of it like this: you rent a house for ₹100 a month with a 5% annual increase for 10 years. In reality, you pay 100, 105, 110, etc. But Ind AS divides the total expected rent equally, so in year 1 you have to record ₹110 even though you only paid ₹100.

These are accounting constructs involving Right-of-Use (ROU) Assets and Lease Liabilities. created under Ind AS 116; they don’t represent real cash outflow. They arise only because of how long-term leases are structured.

So, are you taking this up with the ministry of corporate affairs and relevant tax authorities?

Everyone in real estate and managed-workspace sectors is raising this. New-age companies coming up for IPOs face the same problem — they take long-term leases for offline real estate use, and then Ind AS 116 makes their accounts look negative.

If we buy assets instead of leasing, we get classified as a REIT, which is a different regulatory category. So, we’re a service-sector company that happens to operate in a real-estate domain. We’re doing our bit by talking to the media and engaging with government officials to explain this anomaly.

We’ve been paying income tax in the past (FY24, FY25) and we’ll pay again in FY26. If we’re paying income tax, we’re not loss-making. The issue for us is that we’re still in a growth phase. We keep adding new assets every quarter. Each new lease adds more notional expense, so we never reach the stage where Ind AS will start showing a profit.

Operationally, though, we’re profitable and cash-flow positive and that’s what matters.

What’s the growth strategy going forward?

It’s a journey. Over the next 3–4 quarters, as people see consistency in results and realize we’re paying taxes, they’ll understand. It’s an education process, both for investors and for the industry.

We are currently present in 16 cities with 9.14 million sq. ft. under management, around 200,000 seats, and 125 centers. Our occupancy is 87%. It usually stays between 80% and 85% depending on new sign-ups each quarter.

Of the 9.14 million sq. ft. signed, 5.8 million is rent-yielding and 6.7 million is rent-paying. That gives us a headroom of 3.34 million sq. ft. for future growth.  Our priority is to maintain 80–85% occupancy and target about 30% top-line growth.

How’s the demand environment now?

It’s robust. In fact, supply is the constraint, not demand. In Koramangala, HSR, Andheri, Baner, Coimbatore, there’s hardly any space available. About 40% of our clients are GCCs and 60% are large enterprises. Around 60% of our leases are sourced directly by our in-house team, because we map talent movements and go before the demand comes.

How do you see industry growth playing out?

We’re first-generation entrepreneurs; everything we’ve built is from our own money and effort. Between Rishi Das [co-founder] and me, we’ve invested Rs 125 crore personally. With WestBridge’s Rs 200 crore, the total equity invested is Rs 325 crore. We’ve been building since 2015. Our vision is long-term. This is a service play, not just a real estate play.

Our value-added services revenue has risen from 11% to 13% and will keep increasing. We’re introducing AI-driven transport modules, live cafeteria crowd monitoring, and green initiatives such as solar energy.

India has about 1 billion sq. ft. of commercial stock versus 12 billion in the U.S. Half of India’s stock is over 10 years old and needs renovation. That’s our opportunity. We are infrastructure partners. It’s a consumer shift. This is not a real-estate story but a service and technology story.

But you will need to keep explaining the financials!

I’m not going to change numbers for optics. I’ll pay actual tax, explain the difference to everyone, and build trust. This is a new way of looking at the business of workspaces.