Urban Company Files Draft Papers for Rs 1,900-Crore IPO

Urban Company has filed draft red herring prospectus with market regulator the Securities and Exchange Board of India for Rs 1,900-crore initial public offering, of which only Rs 429 crore is the fresh issue component. None of the promoters are offloading in the offer-for-sale component, only other investors are paring their stake via this issue, as per the information available in the DRHP. As of February 2025, promoters held just 20% stake, on a fully diluted basis, in the company.

Urban Company intends to use Rs 190 crore of the net proceeds for developing technology and cloud infrastructure, Rs 70 crore for paying lease of its offices, and another Rs 80 crore towards marketing-related activities. The company might also undertake a pre-IPO placement before filing RHP for an aggregate amount of Rs 85.8 crore, it said.

Urban Company operates a technology-driven, online services marketplace for services and solutions across various home and beauty categories. As of December, the company operated in 48 cities in India and also in UAE, Singapore, and Saudi Arabia. Share of revenue from international business has been increasing on a steady rate and it accounted for nearly 14% of the company’s total revenue in Apr-Dec 2024, as per the company’s draft papers.At

The company garnered profit during the nine-month ended December against a loss it incurred during the same period a year ago. While one can argue that the earnings of the company was mainly boosted by a one-time tax credit of Rs 215.46 crore, the company managed to book profit before tax as well, though it was just Rs 27.14 crore.

Urban Company had incurred losses in all the preceding three years FY24, FY23 and FY22. However, it has shown steady improvement on the revenue front, as it rose 30% between FY23 and FY24 and 45% between FY23 and FY22. Further, it had recorded net cash inflow of Rs 63.5 crore as of December 2024-end up from Rs 34.1 crore a year ago.

There is a huge upside for the company’s growth as the market in which the firm operates is largely untouched by the online application operators. According to a Redseer report cited by the company in its DRHP, the home services industry in India is largely unorganised, fragmented, and offline, with online penetration of less than 1.0%, as of 2024, based on net transaction value. In addition to this, the total addressable market in India for the industry is of $59.2bn in 2024, and is expected to grow at a compound annual growth rate of 10-11% up to $97.4bn in 2029.

As per the DRHP filed, the company had no outstanding borrowings as of December 2024, whereas it has marked Rs 55.63 crore as contingent liabilities towards GST matters and other matters.

The company is coming up with an IPO at a time when Ather Energy’s IPO managed to get just 16% subscription on its first day. While anything can change by the time Ather reaches its final day of issue, grey market premium of the issue suggest a subdued sentiment.

Urban Company, with huge potential in the segment and a recent achievement of booking a profit, could hopefully garner more support for its IPO. Of the total 43 IPOs in 2025, including the ones on SME board, 13 are in loss with respect to their issue price, according to the BSE website.