Shares of Urban Company Ltd. rallied 12% on Monday, Aug. 3 after global brokerage Morgan Stanley provided a double boost to the stock with a target price hike over business growth and structural expansion prospects. The multinational home service provider's stock saw strong buying interest after the brokerage re-rated the stock with a double upgrade from 'underweight' to 'overweight'. Morgan Stanley analysts have hiked the target price for Urban Company from Rs 128 to Rs 165.
On Monday, shares of Urban Company opened at Rs 136.33 against a previous close of Rs 129.39 and extended gains by upto 12% to hit an intraday high of Rs 152.21 apiece on the NSE. The stock last traded 12.855 higher at Rs 147.97 apiece on the NSE. This compares to a rise of 0.88% in the Nifty 50 benchmark. The stock is up 12% in one week, 11% in one month, and nearly 12% on a year-to-date basis. The company commands market cap of Rs 22,765.67 crore, as per NSE data.
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Urban Company Share Price Intraday
Why are Urban Company sharea rallying in trade today?
Morgan Stanley delivered a "double upgrade" to 'Overweight' from 'Underweight' and raising its target price significantly from Rs 128 to Rs 165. The brokerage cited structural expansion in the company's growth rates across its core India consumer services (excluding Instahelp) and its international operations. Analysts expressed increased confidence in profitability across segments, driven by strong execution, which Morgan Stanley is weighting more heavily than external competition factors for the Instahelp business.
The brokerage suggested that profitability targets could be achieved ahead of management's guidance and noted that elevated losses in Instahelp might prompt earlier consolidation. With the Return on Capital Employed (ROCE) expected to normalize at 20% or more in a steady state, Morgan Stanley analysts consider the starting point of valuation to be reasonable following a period of significant underperformance, making the midcap stock a compelling re-rating candidate.
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