Urban Company shares drop 3% after Morgan Stanley's 'Underweight' call, Goldman Sachs remains 'Neutral'

Urban Company share price

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26 Aug, 2025 12:21

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The shares of Urban Company dropped more than 3 percent on October 23 after bearish noted by international brokerages Morgan Stanley and Goldman Sachs dampened investor sentiment.

The newly-listed stock was trading at Rs 153 apiece in the morning trading hours on Thursday.

Morgan Stanley initiated coverage on Urban Company with an ‘Underweight’ call and a target price of Rs 117 per share. This implies a downside potential of nearly 26 percent from the stock’s previous closing price of Rs 157.83 per share.

The international brokerage said that the company has a large addressable market in online home services, supported by strong moats. However, it initiated coverage on the stock with an ‘Underweight’ rating as the growth has already been priced in.

Core India consumer services NTV is expected to grow at a healthy 18-22 percent CAGR over FY25–28, Morgan Stanley added. High churn and supply constraints however will keep growth calibrated, it further said.

India consumer services may reach 30 percent adjusted EBITDA margin in the medium term, the brokerage said, while adding that valuation multiples will likely remain in-line with strong and established Indian internet peers.

Goldman Sachs initiated coverage on Urban Company with a ‘Neutral’ rating and a target price of Rs 140 per share. This implies a downside potential of more than 11 percent from the stock’s previous closing price.

The international brokerage views the company’s business model as defensible, with strong execution track record. It expects the firm to post a 24 percent revenue CAGR over FY25-30, and 35 percent EBITDA CAGR for India services (excluding InstaHelp).

Goldman believes that the business strength and outlook are already prices into its premium valuations. The company trades at 9x FY28E EV/sales, and 64x FY28E EV/EBITDA (excluding InstaHelp), it added. The brokerage noted that the stock trades at a premium to its internet peers, yet remains broadly in-line on a growth-adjusted basis.

Urban Company shares had made a bumper market debut on September 17, listing at a premium of over 57 percent over the IPO price at Rs 162.25 per share on the NSE. The shares gained further to close 64 percent higher than its IPO price on its debut day.

The shares of the app-based beauty and home services platform continued to record strong gains for the next few sessions, rising around 24 percent in three sessions post debut to hit a high of Rs 201.18 per share on September 22. The shares of the company however sharply declined following that, dropping around 26 percent to hit a low of Rs 149.46 apiece on October 14.

At its low, the stock was down around 8 percent from its listing price of Rs 162.25 per share. It was however up more than 45 percent from its IPO price of Rs 103 apiece.

Urban Company shares are however still up more than 48.5 percent from its IPO price.

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