Urban Company IPO Opens: 'Subscribe' Says DRChoksey — Check Key Details

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DRChoksey Report

Urban Company Ltd. launched its initial public offering on Sep 10 and the offer closes for subscription on Sep 12.

Urban Company is India’s leading techdriven home services marketplace, operating across 51 cities across India, UAE, Singapore, and through a joint venture in Saudi Arabia. The company has set the price band between Rs 98 and Rs 103 per share. 

The Rs 1,900-crore IPO comprises a fresh issue of 4.58 crore shares amounting to Rs 472 crore and an offer-for-sale of 13.86 crore shares worth Rs 1,428 crore.

The allotment for Urban Company IPO is expected to be finalized on Sep 15.

The shares will be listed on both the National Stock Exchange and the BSE on Sep 17..

Kotak Mahindra Capital Company Ltd., Morgan Stanley India Company Pvt Ltd., Goldman Sachs (India) Securities Pvt. Ltd., JM Financial Ltd. are the book-running lead managers for the public issue.

Objects of the Offer

• Expenditure for new technology development and cloud infrastructure.

• Expenditure for lease payments for its offices.

• Expenditure towards marketing activities.

• General corporate purpose.

Valuation

The company has serviced ~14.6 million. customers till date. Moreover, it has witnessed a healthy growth of 25.5% CAGR in its overall NTV over FY23-25, driven by an increase of 17.3% CAGR growth in annual transacting users and a growth of 4.6% CAGR in avg. spend per transacting user.

Its revenue has grown at a healthy pace of 34.1% CAGR over FY23-25. Moreover, during the same period its Ebitda margin has improved from -57.2% in FY23 to -2.8% in FY25, led by its strict cost control initiatives.

Urban Company’s initial issue is priced at 12.4x trailing twelve months EV/Sales, which appears higher compared to its listed peers in the food service category.

Moreover, we have compared the company's financial performance with other service companies (not directly comparable) and believe its issue to be fairly priced.

We believe the company is well-positioned to capitalize on the growth driven by expanding consumer segments and shifting preferences towards higher spends on experiences. We assign a “Subscribe” rating to its initial issue.

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