Urban Company IPO: Risky Bet With High Valuation, Slow Growth, No Underwriters?
Urban Company stays sole major player in the home services space, unlike sectors such as q-comm where competition grew fast. Lack of rivals may be reflecting limited investor interest.
Urban Company Ltd. will launch its Rs 1,900-crore initial public offering on Wednesday. With a face value of Rs 1 per share and the upper-end price band of Rs 103, the company is seeking a 100-time valuation of its nominal worth. This a bold move given its slow growth trajectory and mounting liabilities.
The home services provider's financial performance over the last three years paints a picture of gradual recovery, but not one that may justify its steep valuation. The company’s profit after tax has remained negative, though losses have narrowed. In FY22, the company reported a loss of Rs 514.14 crore, which narrowed to Rs 312.44 crore in FY23. The trend continued in FY24, with losses further reducing to Rs 92.73 crore.
Meanwhile, current liabilities have steadily increased, from Rs 172.42 crore in FY22 to Rs 244.06 crore in FY24, indicating rising operational pressures. The financials suggest a business still in transition, which may not yet be stable enough to command a premium valuation.
One of the most striking aspects of Urban Company's IPO is the absence of underwriters. In most large public offerings, underwriters play a critical role in pricing the issue, guaranteeing subscriptions, and instilling investors' confidence. Their absence here may reflect uncertainty about demand, or a lack of consensus on valuation, leaving the company exposed to market volatility during listing.
Urban Company's business model is built around gig workers, barbers, electricians, beauticians, and technicians, largely unskilled or semi-skilled labour. In the June 2025 quarter, the company reported 54,347 average monthly active service professionals, up from 50,992 in June 2024. However, the FY25 average was lower at 47,833, indicating seasonal volatility and high attrition.
This attrition poses a significant risk as many service professionals bypass the platform after initial contact with customers, offering services independently. This disintermediation risk undermines Urban Company's aggregator model and threatens long term customer retention.
The company, in its DRHP, mentioned the above as a risk factor, stating, "We face intense competition across the markets we serve, which may result in reduced demand for services on our platform or reduced number of service professionals signing up for our platform, resulting in a negative impact to our revenues and costs." It further added that, "If we are unable to attract and retain service professionals on our platform, our platform will become less appealing.”
Sector Lacks Competing Players
Urban Company has operated without serious competition for nearly a decade. Unlike sectors such as quick commerce (Blinkit, Instamart, Zepto), fintech (Paytm, PhonePe, BharatPe), or e-grocery (BigBasket and Tata Neu), the home services space has failed to attract any other major rival or investors. Notably, the company has no listed peers.
This is not necessarily a testament to Urban Company’s dominance. Rather, it could be reflecting the low-margin, high-churn nature of the business, which likely makes it unattractive for venture capital. The platform’s dependence on low-skilled labour, limited to metro cities, further narrows its scalability. Most customers are urban, and the model has not yet reached Tier-3 markets.
Urban Company’s strengths lie in its brand recall, tech-enabled platform, and first-mover advantage. It has built a loyal customer base in metros and streamlined service delivery through its app.
However, its weaknesses are significant. The company is not yet profitable, faces high attrition, and has limited geographic reach. Its bank balance has shrunk, and liabilities are rising, suggesting financial strain.
