Will Urban Company’s IPO deliver returns despite rich valuations?

Synopsis

Urban Company plans to raise ₹472 crore through fresh equity and ₹1,428 crore via offer for sale. While revenue grew 34.1% to ₹1,144.5 crore between FY23-FY25 and the company turned profitable in FY25, net profit dipped 45% in the June quarter. With a high P/E multiple of 62, the IPO is suitable for investors with high-risk tolerance.

ET Intelligence Group: Urban Company, an online marketplace offering home and beauty services, plans to raise ₹472 crore through fresh equity for new technology development, cloud infrastructure, lease payments and marketing activities. It will raise up to ₹1,428 crore through an offer for sale. Promoter stake will fall to 20.4% after IPO from 21.1%.

The company's revenue increased by 34.1% to ₹1,144.5 crore annually between FY23 and FY25. However, it has just started reporting profit in FY25. Further, net profit in the June quarter dropped by 45% year-over-year and valuation looks rich. Given these factors, investors with high-risk appetite may consider the IPO.

Urban Company provides services including home cleaning, pest control, plumbing, carpentry, appliance servicing and electrical repair, painting, skincare, and massage therapy among others. It also launched water purifiers and electronic door locks under the 'Native' brand in FY23 and FY24, respectively. It operates in 47 Indian cities and 4 cities across the UAE and Singapore as of June 2025. This apart, it also has a joint venture in the Kingdom of Saudi Arabia.

Agencies

Net transaction value (NTV) grew 25.5% to ₹3,270.9 crore between FY23 and FY25. NTV and revenue increased 20% and 30.8% on-year to ₹1,030.6 crore and ₹367.3 crore in June 2025 quarter. It reported net profit of ₹239.8 crore in FY25 against net loss of ₹312.5 crore. Adjusted Ebitda improved to ₹12.1 crore in FY25 from an operating loss of ₹297.7 crore in FY23. The company reported net cash flows from operating activities of ₹54.6 crore compared with a cash outflow of ₹85.6 crore and ₹237.8 crore in FY24 and FY23, respectively.

Considering post-IPO equity and net profit for FY25, company demands a P/E multiple of up to 62. It does not have a direct publicly listed at-home services peer. On price-sales front, Urban Company demands multiple of 12 vs P/S between seven and 16 for peers like Eternal.

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