UBS has initiated coverage of Urban Company with a Buy rating and a price target of Rs 180, giving the home-services platform the highest target among analysts tracked by Bloomberg. The target implies an upside of about 16% from Urban Company's last traded price of Rs 155.47 on Aug. 21. The initiation comes after Morgan Stanley raised its target to Rs 165 on Aug. 3, while Kotak Securities retained its positive view with a Rs 150 target.
Bloomberg data shows that Urban Company has eight analyst price targets, with a consensus target of Rs 143.88. That represents a downside of 7.5% from the current market price. Three analysts have a Buy rating, three have Hold ratings and two have Sell ratings.
UBS' Rs 180 target is based on its view that online home services could be entering a phase similar to the growth seen in quick commerce. The brokerage said Urban Company's monthly active users across its platforms have grown consistently over the past four quarters, while service partners and transactions have also increased.
'Faster Home-Services Growth'
UBS said Urban Company had 4.8 million users, 39,000 service partners and 12 million transactions in FY24. It expects revenue to grow at a compound annual growth rate of 32% from FY24 to FY29.
The brokerage also expects the company's gross merchandise value to increase 2.9 times over the same period. It estimates Urban Company currently has about 6.8% of the addressable market in India.
UBS said the addressable market for home services could be 2-2.5 times the company's current estimate. It expects penetration to remain below 5% of the total addressable market based on its FY31 estimates, leaving room for further expansion.
The brokerage pointed to the growth of faster home-service offerings as another factor. Urban Company's InstaHelp competes with newer services such as Snabbit and Pronto in categories including cleaning, home repairs and beauty services.
UBS said Urban Company has an advantage from its existing service-partner network and supply infrastructure, although the home-services market remains competitive.
Morgan Stanley, Kotak Securities Targets
Morgan Stanley upgraded Urban Company on Aug. 3 and set a price target of Rs 165. Its target is the second highest among the analyst estimates shown by Bloomberg and implies further upside from the current price.
Kotak Securities retained its positive view on Aug. 3 with a Rs 150 target. Goldman Sachs has a neutral rating with a Rs 135 target, while Ambit Capital has a Sell rating with a Rs 91 target.
JM Financial has a Reduce rating with a Rs 135 target, while Motilal Oswal has a Neutral rating with a Rs 140 target.
Urban Company's last traded price was Rs 155.47 on Aug. 21. Bloomberg data shows the stock has delivered a 50.9% return over the last 12 months.
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