Urban Company IPO Launch: Retail Segment Fully Subscribed in Under an Hour – Is It Time to Invest?
Urban Company has made a significant splash in the market with its initial public offering (IPO), which opened on Wednesday. The company is seeking to raise ₹1,900 crore, and within just one hour of its launch, the retail and employee portions of the offering were fully subscribed. This strong demand reflects the growing interest from retail investors, with bids for 62 million shares already placed, accounting for 58% of the total 107 million shares available. The IPO’s overall subscription rate reached 1.01 times, with retail investors bidding 3.02 times their allotted shares.
IPO Subscription Details
Urban Company’s IPO includes a fresh issue of ₹472 crore and an offer-for-sale component of ₹1,428 crore from existing investors such as Accel, Elevation Capital, Tiger Global, Vy Capital, and Bessemer Venture Partners. The subscription window for the IPO will remain open until September 12, with share allotment scheduled for September 15. The shares are expected to be listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on September 17. Prior to this public offering, Urban Company successfully raised ₹854 crore from anchor investors, including GIC, Fidelity, and Norges Bank. Additionally, a secondary sale worth ₹500 crore was completed last week, where SBI Mutual Fund and Permira acquired shares at ₹103 each from early investors.
Market Position and Growth Potential
Urban Company operates in the home services sector, which is largely unorganized and valued at around ₹60 billion. The company has established a strong foothold in this market, offering a variety of services, including beauty and wellness treatments, home repairs, and maintenance. Analysts project that Urban Company’s Net Transaction Value (NTV) and revenue will grow at compound annual growth rates of 25.5% and 34.1%, respectively, between FY23 and FY25. The company is expected to break even on its EBITDA by FY26. At the upper end of the IPO price band, Urban Company is valued at a post-issue Price-to-Sales (P/S) multiple of 12.9x, indicating a promising outlook for potential investors.
Investment Recommendations
Brokerages are generally recommending a long-term investment strategy for Urban Company’s IPO. They highlight the company’s robust position in the home services market and its potential for expansion into new service segments. Some analysts suggest that conservative investors may want to wait for more favorable entry points, while those optimistic about the formalization of India’s home services sector should consider participating in this IPO. Urban Company, founded in 2014, has shown impressive growth, with its operating revenue increasing by 38% to ₹1,144 crore in FY25. The company also reported a net profit of ₹240 crore, a significant turnaround from a loss of ₹93 crore in FY24.
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