Urban Company, the popular home services platform formerly known as UrbanClap, is gearing up for its big leap into the public markets. The company has filed its Draft Red Herring Prospectus (DRHP) with SEBI, setting the stage for a ₹1,900 crore IPO. The offering includes a mix of fresh share issuance and a substantial offer for sale (OFS) by early investors.
A Closer Look at the IPO Structure
Urban Company’s IPO will comprise a fresh issue of ₹429 crore and an offer for sale worth ₹1,471 crore. The OFS will allow early backers like Accel India, Bessemer India, Elevation Capital, Tiger Global, and VY Capital to partially exit and book returns on their investments.
The fresh funds raised will be used across various strategic goals, including platform upgrades, AI-driven tools, marketing campaigns, and office expansion. Notably, ₹190 crore is allocated for tech and cloud infrastructure enhancements, signaling the company’s tech-first approach.
Urban Company’s Financials Show Progress — with Caveats
Urban Company’s financials reveal a clear upward trend in revenues. The company reported a jump from ₹437.6 crore in FY22 to ₹828 crore in FY24. A key highlight is the shift in adjusted EBITDA, which turned positive at ₹9.3 crore in the first nine months of FY24, after being negative for two consecutive years.
In terms of net profits, Urban Company posted ₹242.3 crore profit in the first nine months of FY24, a sharp turnaround from previous losses. However, a significant part of this gain—₹215 crore—came from a deferred tax credit, meaning sustainable profitability is still a question mark.
Meanwhile, operational metrics like Gross Merchandise Value (GMV) and annual transacting consumers have seen consistent growth. GMV grew from ₹1,509 crore in FY22 to ₹2,564 crore in FY24, though the growth rate slowed from 38% to 23%. The platform now boasts 5.8 million transacting users and 46,000 active service professionals.
Urban Company Risks: Profitability, Gig Economy & Competition
Despite its upward trajectory, Urban Company’s DRHP cautions about future uncertainties. The company clearly states, “There is no guarantee that we will be able to maintain profitability in the future.”
Key risk factors include:
Heavy dependence on gig workers makes the business vulnerable to changing labor laws.
Quality control and partner churn, especially as it expands into newer cities and service categories.
Regulatory risks in international markets where the brand is expanding.
Intensifying competition from local players and established brands.
Another concern is equity dilution due to ESOPs. Share-based payment expenses accounted for 6.9% of revenue in FY24, and further grants under its ESOP 2015 and ESOP 2022 plans could reduce the value of existing shares.
The company also warns of challenges in maintaining quality across geographies and service lines, which could harm its brand reputation if not addressed effectively.
IPO Outlook: A Defining Moment for Urban Company
Urban Company’s IPO will serve as a litmus test for investor confidence in consumer internet platforms amid a cautious funding environment. While its revenue growth, tech investments, and improving margins are promising, long-term profitability and operational consistency remain under close watch.
The road ahead will depend on how well Urban Company manages scale, service quality, and competition — all while navigating the dynamic regulatory landscape of the gig economy.
