Urban Company near 'breakeven' stage, focus now on margins, says CEO as IPO fully subscribed on day one

Urban Company’s revenue from operations surged from Rs 437.6 crore in FY22 to Rs 1,144.5 crore in FY25, translating into a CAGR of about 34-35%. This growth has been driven by steady demand across beauty, wellness and home repair services, as well as early traction in newer verticals like water purifiers and smart locks.

While the CEO refrained from any forward guidance, he emphasised the size of the opportunity is over Rs 5 lakh crore, with less than 1% currently organised. “We believe it’s still Day One for us,” he said, underlining the ambition to continue scaling at a healthy pace.

Also Read: IPO not an exit; invested in pre-offer rounds of Urban Company, Bluestone: Prosus India's Ashutosh Sharma

Can Profitability Sustain?

FY25 marked a milestone for the company with an adjusted net profit of Rs 28 crore, aided partly by a deferred tax credit. The company swung from a negative EBITDA of Rs 373 crore in FY22 to a positive Rs 12 crore in FY25. “The India consumer services business already delivers double-digit EBITDA margins, at around 10% as a percentage of net revenue. We are broadly at a breakeven stage now,” Bhal told Moneycontrol, highlighting that over 50% of incremental revenue between FY22-25 translated into operating profits. Going forward, the focus remains on expanding margins, particularly in India, even as newer verticals require upfront investments.

Margin Trajectory

Urban Company’s core India consumer services segment has shown a steady margin improvement, with adjusted EBITDA margins rising to 3% of net transaction value in FY24 and 4% in Q1FY26, Bhal said. While nascent businesses like InstaHelp and Native are still investment-heavy, management expects operating leverage and scale benefits to drive profitability in the medium term.

Bhal stressed transparency in disclosures, promising segment-wise reporting of growth, contribution margins, and EBITDA from the very first earnings call.

Expansion Plans

Currently present in 47 Indian cities and three international markets - UAE, Singapore, and Kingdom of Saudi Arabia - Urban Company sees ample headroom in existing geographies before venturing further abroad. “Within these 47 Indian cities, we’re not yet present across all micro-markets or service categories. Expansion will be calibrated, with India remaining the key growth driver,” Bhal said.

International operations, though promising, come with regulatory and currency-related risks, which the company aims to mitigate through stronger processes around safety, trust, and compliance.

Valuation Concerns

At the upper end of the Rs 103 price band, Urban Company is seeking a valuation of about Rs 15,000 crore through the public issue. Some analysts have flagged rich valuations, given thin operating margins and heavy investment required in newer verticals.

However, Bhal argued that a pre-IPO round led by SBI Mutual Fund, Prosus and Elevation Capital at Rs 103 per share had set the benchmark. Both long-term investors and fresh entrants participated in the anchor round, underscoring confidence in the company’s long-term story.

“Ultimately, PAT and cash flows will determine valuation,” Bhal said. “Our job is to build a highly valuable company for society and let value creation drive market perception.”

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