Urban Company Ltd’s shares hit an all-time low of ₹125.23 on the NSE on Monday. While still at a premium to the initial public offering price of ₹103, it marks a 38% slide from the high of ₹201.18 on 22 September.
A crucial date to track is 15 December, when anchor investors who are now under a lock-in period will be able to sell 41.5 million shares, or 3% of the company’s equity capital. Notably, the fall in the stock price had accelerated after the first lock-in period ended on 15 October.
The stock remains vulnerable, considering that the September quarter (Q2FY26) results did not impress investors. Urban Company is India’s first listed tech company in homecare services.
The management tracks net transaction value (NTV) as a key metric and looks to achieve a 9%-10% Ebitda margin on a steady-state basis in the long term from 2.4% in Q2. This guidance is for its India consumer services business. It excludes InstaHelp, the company’s house help and cleaning services, which does not have any meaningful revenue yet and incurred a loss of ₹44 crore at an adjusted Ebitda level in Q2.
The NTV of the company’s Indian consumer services grew 19% year-on-year to ₹762 crore. Revenue from operations increased 24% to ₹262 crore but adjusted Ebitda (mainly before Esop and lease payments) fell 10% to ₹18 crore, largely due to increased overheads including marketing spending.
Scope for services
Urban Company said it can be present in at least 100 cities. Even in the 47 cities where it is now present, there is scope to provide 60 categories of services in 500 micromarkets (each in an area of about 5 km radius). So, total services that can be provided is 30,000 and the company has been able to reach about one-third of that.
Notwithstanding the huge scope for growth, there is the risk of disintermediation (when customers and service partners bypass Urban Company). Disintermediation benefits customers because they save on the company’s platform fees, while service partners can earn more.
Urban Company’s current enterprise value is ₹17,000 crore. Considering an NTV CAGR of 20% up to FY29, it could reach about ₹5,500 crore. The potential Ebitda could be almost ₹550 crore, going by the management guidance of 10% steady-state Ebitda margin.
So, the stock trades at 31x EV/Ebitda on FY29 estimates based on the India consumer business alone—a factor that could deter investors from taking a plunge in the near term.
