Morgan Stanley has reiterated its 'Underweight' rating on Urban Company while slightly raising the target price to Rs 119 from Rs 117, following the company's Q2FY26 results.
The performance for the quarter was broadly in line with expectations, with key operating metrics such as Net Transaction Value (NTV) and annual transacting users (ATU) coming in marginally ahead of estimates, the brokerage noted.
Notably, the core India consumer segment, excluding Insta, showed signs of growth acceleration. The management provided clarity on profitability outlook in both the near and medium term, highlighted breakeven progress in international markets, and emphasized continued investment in the Insta vertical, Morgan Stanley said.
“Growth acceleration in core India consumer ex Insta, clarity on near term (F26) and medium term outlook on profitability in this segment, breakeven in international business, and strong focus on investments in Insta were key highlights from the results,” the brokerage said.
Morgan Stanley further noted that Urban Company's core India services business continues to see steady momentum in annual transacting customers and Management indicated it would watch out for sustainability of same in next 2-3 quarters and would like to reinvest any profits made back into the business.
Highlighting scope of improvement for the company the brokerage said that Urban Company disclosed monthly operating metrics on Instahelp which is showing stronger adoption however at this point in time there is limited clarity on potential timing of breakeven or even the extent of investments required given it is in an early phase of investment.
Urban Company's second quarter results showed a sharp year-on-year increase in net loss, which widened to Rs 59.3 crore from Rs 1.8 crore in the same period last year. Despite the higher loss, the company's revenue rose by 37.1% to Rs 380 crore, up from Rs 277 crore in Q2 FY25. The Ebitda loss also deepened, increasing to Rs 68.4 crore from Rs 16.3 crore in the year-ago quarter.
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