Urban Company

IPO Size: Rs. 1,900 cr

• Fresh Issue of Rs. 472 cr for (i) technology development Rs. 190 cr (ii) marketing Rs. 90 cr, (iii) lease payment Rs. 75 cr  
• Offer for Sale (OFS) of Rs. 1,428 cr by 5 investors Elevation, Accel, Bessemer, Internet Fund and VYC11 trimming their 38% combined holding to 30% post IPO.

Price band: Rs. 98-103 per share

M cap: Rs. 14,790 cr, implying 13% dilution

• 75% for institutions and only 10% for retail, loss in FY24 and FY23

IPO Date: Wed 10^th Sep to Fri 12^th Sep 2025, Listing Wed 17^th Sep 2025

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

Marketplace for Home Services

Urban Company is a 11 year old technology platform, providing home services in India, UAE, Saudi Arabia and Singapore. While it proudly highlights earnings of professionals via its platforms, company’s own core operations are yet to be profitable, as domestic products business and international geography, together accounting for 1/4^th of Rs. 1,250 cr topline, are still loss making. Native (door locks and water filter) is a product business and learnings such as high bad debts etc. are still being incorporated, with 15% EBITDA loss just for Native, on Rs. 116 cr topline.

Other Income Saves the Day

Urban Company reported Rs. 1,261 cr topline in FY25, with PAT at Rs. 240 cr, due to Rs. 211 cr deferred tax credit. PBT stood at Rs. 37 cr, on account of Rs. 116 cr other income on Rs. 1,515 cr surplus cash, as of 31.3.25. Even if expenses towards share based payment (ESOP) of Rs. 73 cr in FY25 is excluded, business reported loss of Rs. 6 cr, for FY25.

Q1FY26 topline rose 31% YoY to Rs. 367 cr, but other income of Rs. 31 cr led to PBT of Rs. 5.6 cr, after Rs. 23 cr ESOP expense. Going by historical trend, ESOP cost may rise after listing, due to change in fair value, with reported bottomline unlikely to spurt meaningfully.   

Unnecessary Dilution via Fresh Issue

Company is addressing genuine need for unavailability of skilled professional for home services, but it is not deploying capital prudently. Till date, it has raised primary capital of approximately Rs. 2,300 cr, of which Rs. 1,341 cr was raised in April 2021. This entire sum of Rs. 1,341 cr raised 4 year ago, is still unused and lying in the bank. In this backdrop, further raise of Rs. 472 cr via fresh issue is absolutely unjustified.

Moreover, IPO’s fresh issue component rose by 10% from Rs. 429 cr stated in DRHP, filed in Apr 2025, on account of higher estimated spends for marketing and lease payments. Is the company seriously budgeting for Rs. 43 cr higher spends 2 years down the line, when it has Rs.1,528 cr in the bank today! Is this exercise merely to ‘right-size’ the IPO or Urban Company lacks growth avenues or is not confident of near-term operating profitability?

Why Tiger Global’s Rush to Complete Exit?

Tiger Global’s Internet Fund is completely exiting its 6 year old investment in Urban Company, at just 9% IRR, having first invested in the company in Aug 2019. On 4^th Sep 2025, two days after RHP filing, it sold half its 4.1% holding, at Rs. 103 per share to institutional investors. In the OFS, it now proposes to sell balance stake, looking for a complete exit.

At a cost of Rs.61.65 per share, Tiger Global which backed Indian tech disruptors like Flipkart, Eternal, Groww, is only making a single-digit IRR in 6 years, yet fully-exiting.

Are Urban Company’s future prospects not optimistic?

Aggressive Pricing

Considering Q1FY26 adjusted EBITDA of Rs. 21 cr and high growth trajectory, FY27E EBITDA of Rs. 120 cr leads to an EV/EBITDA multiple of 111x, on Rs. 13,260 cr enterprise value (EV), on a one year forward basis. This is significantly higher than other profitable start-ups like CarTrade, ruling at FY26E EV/EBITDA multiple of 45x, and more than discounts 2 year forward earnings of Urban Company, even in a best-case scenario. Keeping consumer lens aside, from the shareholder’s point of view, IPO pricing is steep, and looks a mere facilitation for part-exit of 5 early backers.

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