The downtrend in Urban Company continued to extend as the stock fell another 7% in Monday’s intraday trade to ₹147 apiece. The company’s weak performance in the September quarter further impacted investor sentiment, keeping the stock in a sustained downward trend.
Though the company reported a 37% jump in revenue to ₹380 crore in the September quarter, the sharp rise in operating expenses weighed on its bottom line, causing net loss to widen to ₹59.33 crore, sharply higher than the ₹1.82 crore net loss reported in the corresponding quarter of the previous financial year.
Its operating expenses during the quarter spiked to ₹462 crore, up from ₹384 crore in the previous quarter. The increase in expenses came as the company stepped up spending on partner training, onboarding, and customer acquisition to scale its new offering, Insta Help.
Amid higher expenses, the company reported an adjusted EBITDA loss of ₹35 crore for the quarter, primarily due to a ₹44 crore loss in Insta Help, its new vertical focused on daily cleaning and housekeeping services.
Meanwhile, revenue from the domestic business jumped 24% YoY to ₹262 crore, with an adjusted EBITDA of ₹18 crore, or 2.4% of NTV, compared with 3.1% of NTV for the same period last year. The company attributed the YoY decline to its continued investments in training and audits, user acquisition, faster fulfilment, customer support, and team expansion, aimed at setting up the business for long-term growth.
The company expects Insta Help to become a large, high-frequency business. According to Urban Company, in just eight months since its launch, Insta Help has scaled rapidly to 4.68 lakh orders in October, despite limited geographic coverage. Customer retention and repeat rates remain strong, though the company noted that steady-state behavior will take time to mature.
Excluding Insta Help, the business delivered an adjusted EBITDA profit of ₹10 crore (+0.9% of NTV), marking an improvement of ₹15 crore year-on-year.
Urban Company share price journey since listing
The stock made a strong market debut in mid-September, listing at ₹162.3 per share, 57% higher than its issue price of ₹103, and maintained the momentum in subsequent sessions, reaching ₹202 per share.
However, the recent sell-off has caused the stock to give up the majority of its earlier gains, falling 28% from its recent highs. Nevertheless, it still trades around 40% above its issue price.
The company raised ₹1,900 crore through the IPO, which was a combination of a fresh issue and an offer for sale (OFS).
In late October, both Morgan Stanley and Goldman Sachs initiated coverage on the stock with ratings of ‘Underweight’ and ‘Neutral,’ respectively, and target prices of ₹117 and ₹140. While both brokerages remain optimistic about the company’s long-term growth prospects, they noted that all positive factors are already priced into the current valuations.
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