Urban Company IPO: Rs 1,900 Crore Issue Opens Today

About the Issue:

Urban Company Limited is coming up with a book-built IPO of Rs 1,900 crore. The issue comprises a fresh issue of 4.58 crore shares aggregating to Rs 472 crore and an offer-for-sale (OFS) of 13.86 crore shares worth Rs 1,428 crore. Kotak Mahindra Capital Company Limited is acting as the Book Running Lead Manager to the issue, while MUFG Intime India Private Limited is serving as the Registrar.

See Details Below:

Utilisation of IPO Proceeds and Promoter Holding:

The company plans to deploy fresh issue proceeds towards:

1. Technology development & cloud infrastructure: Rs 190 crore
2. Lease payments for offices: Rs 75 crore
3. Marketing activities: Rs 90 crore
4. General corporate purposes

The promoters of the company are Abhiraj Singh Bhal, Raghav Chandra and Varun Khaitan.

Company Profile

Incorporated in December 2014, Urban Company Limited is a technology-driven, full-stack online marketplace that connects consumers with trained, verified service professionals for home and beauty services. The company operates across 51 cities in India, UAE, and Singapore, in addition to a joint venture presence in Saudi Arabia.

Urban Company’s platform offers a wide range of services including cleaning, plumbing, electrical work, appliance repair, beauty treatments, and wellness therapies. The company has also ventured into the home solutions segment through its in-house brand Native, which markets water purifiers and electronic door locks.

The business model not only empowers consumers with reliable, standardised services but also uplifts service professionals by providing training, tools, financing, insurance, and branding support. This improves service quality while enhancing the earning potential of professionals on its platform.

As of June 30, 2025:

• 54,347 average monthly active service professionals were engaged on the platform.
• Operations spanned over 12,000 hyperlocal service micro-markets.
• Revenue streams included consumer platform fees, sales of consumables and tools to professionals, and sales of Native products to consumers.

Urban Company has successfully completed 97.45 million service orders since inception, underscoring its strong brand recall and network effect.

Industry Outlook

India’s home services market, valued at USD 59.2 billion in 2024, is expected to grow to USD 97.4 billion by 2029 at a 10–11per cent CAGR, though online penetration is under 1per cent, offering vast growth potential.

Growth drivers include rising incomes, urbanisation, dual-income households, and greater adoption of digital payments and smartphones. Key categories are:

• Beauty & Wellness (~Rs 575–585 billion, 9–10per cent CAGR)
• Home Repair & Maintenance (~Rs 2,940–2,990 billion, 10–11per cent CAGR)
• Other services (~Rs 1,600 billion, 10–12per cent CAGR)

Online platforms are projected to grow at 18–22per cent CAGR, reaching Rs 105–110 billion by FY2030. Urban Company’s serviceable market in India’s top 200 cities is worth Rs 1,770–1,850 billion, with only 7.8per cent household penetration as of FY25, signalling long-term upside.

Globally, its presence in UAE, Singapore, and Saudi Arabia taps into a US$23 billion market, growing at ~9–10per cent CAGR. The Native brand further opens scalable opportunities in water purifiers (Rs 100–110 billion by FY2030) and electronic locks (37–40per cent CAGR growth).

Financials:

For Q1 FY26 (three months ended June 30, 2025), the company reported revenue from operations of Rs 367.28 crore and a net profit of Rs 6.94 crore.

(Source – Company’s RHP)

Balance Sheet Snapshot

(Source – Company’s RHP)

Key Metrics

(Source – Company’s RHP)

Key ratios

(Source – Company’s RHP)

Listed Peer Comparison 

Urban Company Limited has clarified that there are no listed companies in India or globally operating with a business model directly comparable to theirs. As a result, the company has not provided accounting ratio or KPI comparisons with any other listed entity.

Strengths

1. Multi-category, hyperlocal platform – Operates across 12,000+ micro-markets with strong network effects and repeat consumer usage.
2. Established brand trust – High consumer ratings (4.79/5.0) and strong recall make Urban Company the most preferred service provider in 51 cities.
3. Professional empowerment – Service partners earn 30–40per cent more than peers through training, tools, and financing support.
4. Robust technology stack – Data-driven algorithms for demand-supply matching, pricing, and service fulfillment enhance scalability.
5. Product innovation – Launch of Native (water purifiers, smart locks) diversifies revenue and leverages consumer trust.
6. Rapid growth trajectory – Revenue CAGR of 34per cent in FY23–25; EBITDA breakeven targeted by FY26.
7. Promoter-led with professional management – Strong leadership team and governance standards.
8. International presence – Expanding footprint in UAE, Singapore, and Saudi Arabia with scalable “do-it-for-me” model.

Weaknesses / Risks

1. History of net losses – Despite revenue growth, Urban Company has faced negative operating cash flows and accumulated losses.
2. Aggressive valuation – At Rs 103 per share, valued at 12.9x P/S and 61.7x P/E (FY25 basis), pricing leaves limited margin of safety.
3. Intense competition – Competes with fragmented offline players and online entrants offering heavy discounts and incentives.
4. Dependence on professionals – Platform success depends heavily on attracting and retaining skilled service providers.
5. Execution risk in rapid scaling – Managing quality across multiple services and geographies poses operational challenges.
6. Low online penetration – Industry penetration remains <1per cent, requiring significant consumer adoption to justify growth expectations.
7. Reputation sensitivity – Poor service quality or unresolved complaints can quickly erode brand trust.
8. Uncertainty in sustained profitability – Long-term viability depends on balancing expansion, cost management, and monetisation.

Valuation and Outlook

Urban Company stands out as the only organised player in India’s technology-driven online services marketplace, offering consumers a reliable, full-stack platform for home and beauty services. With operations across 51 cities in India, UAE, and Singapore and a JV in Saudi Arabia, the company has established itself as the most preferred brand in its category.

The company has shown robust topline growth, with revenue projected to grow at a CAGR of 34.1per cent during FY23–25, while Net Transaction Value (NTV) is expected to rise at a CAGR of 25.5per cent over the same period. Profitability metrics are improving, with EBITDA breakeven targeted by FY26. However, the IPO is aggressively priced. At the upper price band of Rs 103, the post-issue market capitalisation stands at Rs 14,790 crore, translating to valuation multiples of 12.9x P/S, 61.7x P/E, and 5.53x P/B, with a return on equity (ROE) of 8.97per cent based on FY25 earnings.

While valuations appear rich, Urban Company provides a unique opportunity to participate in India’s rapidly formalising services economy. Its network effects, hyperlocal execution, and strong technology backbone give it a competitive advantage in a market dominated by unorganised players. The company’s ability to expand internationally and diversify into product offerings further strengthens its long-term outlook.

Recommendation

Urban Company offers investors exposure to a category leader with high brand recall, recurring demand visibility, and multiple monetisation levers. The company has built a scalable platform, completed over 97 million service orders, and is well-positioned to benefit from structural tailwinds in urban lifestyle services.

That said, investors must weigh the risks: past losses, negative operating cash flows, and execution challenges in scaling rapidly. The aggressive pricing leaves limited margin of safety in the near term.

Considering its growth potential and improving profitability trajectory, we recommend a “Subscribe” rating.