NEW DELHI: Urban Company's IPO, with an issue size of up to Rs 1900 crore, has set its price band between Rs 98-103 per share, as per recent regulatory filings. The IPO, which is a 100% book-built issue, is open for subscription from September 10 to September 12, 2025. This move marks a significant milestone for the tech-driven marketplace specialising in home and beauty services.
The IPO consists of a fresh issue of up to Rs 472 crore and an offer for sale (OFS) of up to Rs 1428 crore by existing shareholders. The company will use the fresh issue proceeds to fund new technology development, cloud infrastructure, office lease payments, and marketing activities, alongside general corporate purposes. It is important to note that Urban Company will not receive any proceeds from the OFS portion.
The company's financial performance has been on a strong growth trajectory. A notable turnaround was achieved in Fiscal Year 2025, where the company swung to a profit after tax (PAT) of Rs 240 crore, a remarkable improvement from a loss of Rs 93 crore in FY24. This profitability comes on the back of robust revenue growth, which climbed from Rs 637 crore in FY23 to Rs 1144 crore in FY25. The company's EBITDA also improved, turning positive at Rs 11 crore in FY25.
Urban Company's business model is a key differentiator in the online services market. Operating in 51 cities across India, the UAE, Singapore, and Saudi Arabia, the company uses a hyperlocal, full-stack approach. This involves not only connecting consumers with professionals but also investing in their training, certification, and providing them with high-quality tools. This model has led to a high customer satisfaction rating and strong repeat business, with the company having served over 14.59 million unique consumers.
Despite these strengths, the company's IPO note highlights several potential risks. These include a heavy reliance on a network of independent gig workers, which could pose challenges related to labor practices and margins. Additionally, some of its newer business lines, like 'InstaHelp', have a limited operating history, and their long-term scalability and profitability are yet to be fully proven. The platform is also exposed to data security and regulatory risks.
The IPO aims to capitalize on the company's significant growth and profitability turnaround. While the use of proceeds for technological and marketing investments signals a forward-looking strategy, investors will also need to weigh the inherent risks associated with a gig-economy-based business model and its operational complexities. The company's ability to maintain its growth trajectory and manage these risks will be a critical factor in its post-listing performance.
IPO Valuation
Implied market cap at the upper price band of Rs 103 is Rs 14,783 crore. The IPO is valued at a P/E ratio of 61.6x based on FY25 PAT of Rs 240 crore. This is a high ratio, typical for a high-growth, tech-enabled company in a nascent market.
According to analysts the valuation is not cheap, but it is justified by the enormous addressable market and low online penetration. The company's dominant leadership position and strong brand, according to analysts, also supports high valuations.
Besides, they feel the company has multiple levers for future growth -- deeper penetration, new categories, international expansion and product sales.
Analysts call
The overarching view from the analysts is a SUBSCRIBE recommendation. The rationale is based on UCL's strong brand leadership, a large and growing addressable market, a scalable and profitable business model, and its unique position to benefit from the formalisation of India's vast but unorganised home services sector.
Rationale for the Subscribe call
Long-Term Growth Story: The IPO offers a pure-play investment into the formalization of India's vast home services market, a powerful megatrend driven by urbanization, rising incomes, and nuclear families.
Quality Business: UCL operates a capital-light, asset-light platform model with strong network effects, high brand recall, and a clear competitive moat built on trust and standardisation.
Proven Execution: Management has successfully navigated the company to profitability while maintaining high growth rates, demonstrating strong execution capability.
The risks are notable but are inherent to a high-growth, disruptive business model. For investors with a medium to long-term horizon and the ability to tolerate volatility, Urban Company represents a compelling opportunity to invest in a category-defining leader.