Urban Company GMP doubles since IPO announcement despite some concerns. What's driving the buzz?

Shares of Urban Company are in heavy demand in the grey market despite high valuations in the IPO, which will be launched later this week. The GMP, which has started at around Rs 10, has more than doubled in the last 6 days to Rs 28 as per the latest update. This indicates a listing gain of 27% over the issue price, which is fixed at Rs 103.

Experts say the IPO pricing is a bit on the expensive side at 12x the earnings if investors are looking for short-term gains. One reason why the buzz around the IPO is investors' faith in long-term prospects, given its brand capital in the home services marketplace.

"The IPO is more suited for aggressive long-term investors," said Abhishek Jain, Head of Research at Arihant Capital Markets.

Unlike some of the earlier tech IPOs, which burnt investors hands due to poor financials, Urban Company has posted solid numbers in the past fiscal year. The company saw a 38% increase in its operating revenue for 2024-25 to Rs 1,144 crore, while it reported a net profit of Rs 240 crore.

The turnaround came on the back of a Rs 211 crore deferred tax credit. However, even on a pre-tax basis, the company reported a profit of Rs 28 crore.

Company profile

Urban Company connects consumers with trained service professionals across categories like cleaning, beauty, repairs, pest control, and wellness. It also sells products under the ‘Native’ brand, including water purifiers and smart locks. Urban Company operates across 51 cities in India and overseas markets, including the UAE and Singapore.

The company highlights its hyperlocal tech-driven model, strong brand trust, and high repeat usage. According to Redseer, Urban Company has completed over 97 million service orders in India since its inception, with professionals on its platform earning 15–20% more than peers in food delivery or quick commerce.

India’s home services market is underpenetrated, but fast-growing, pegged at $59 billion in 2024 and projected to expand to $97 billion by 2029.

IPO detaills

The IPO will be open for subscription for investors on September 10 and it will close on September 12. The public offering will include a fresh issue worth up to Rs 472 crore and an offer for sale (OFS) of up to Rs 1428 crore.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)