Urban Company gears up for IPO by 2023, hits 140% pre-covid business level

Backed by investors including Ratan Tata and Accel, the company plans to scale up its operations in Tier-II and -III cities of India in the next few years

Technology-enabled home services firm Urban Company is getting set to go public in the next three years. Backed by investors like Accel Partners, Ratan Tata, and Flipkart CEO Kalyan Krishnamurthy, the company recently crossed 140 per cent of its pre-covid business.
 

A shift to home services has got a significant boost in the wake of the Covid-19 pandemic, with an increasing number of consumers staying at home and adopting online services with greater frequency.
 

“We are aggressively thinking about going public in the next two years,” said Abhiraj Bhal, co-founder of Urban Company, in an interview. “In the next six months, I think we can grow a lot as a company. We are seeing positive tailwinds. As a result of the pandemic, people don't want to step out, so they are used to getting services at home. They want to rely on an organised player that invests in safety.”
 

Founded in November 2014 by Abhiraj Bhal, Varun Khaitan and Raghav Chandra, Urban Company (formerly UrbanClap) is the largest home services company in India and the UAE. It offers services like beauty and spa at home, cleaning, plumbing, carpentry, appliance repair and painting through its mobile app and website. It has about 1.5 per cent of the overall market, most of which is still offline.

The Gurugram-based firm works with over 27,000 service partners and operates in 18 cities of India, besides four international markets of Dubai, Abu Dhabi, Sydney and Singapore. The company, which has so far raised a total funding of about $190.9 million from investors, plans to scale up its operations in Tier-II and -III cities, where it is observing a huge demand amid the pandemic, over the next few years. “We are quite bullish on the Tier-II story in India,” said Bhal. “So far we are present in only 18 cities in the country; our aim is to be in top 50 cities (including Tier-II ones).”
 

The firm is witnessing a huge demand for services under beauty and wellness and home repairs and maintenance categories. For instance, beauty and wellness at home have grown almost 4-5 times amid the pandemic. “We really had to build up the supply side at a rapid pace. We had to find the barbers, skill them and take them online and provide tools,” said Bhal. “We had to do this at a (strong) footing and we continue to do it.”
 

Due to the pandemic, the local services sector was hit hard, and whether the company could still grow was a big challenge.

Abhiraj Bhal, co-founder of Urban Company

The firm became operational again in June. And it has seen a rapid recovery since then. During the lockdowns, Urban Company made a lot of effort on safety processes, including on the training of its staff, daily temperature checks and the procurement of the personal protective equipment (PPE) kits. Through its platform, it is able to understand with a very high degree of accuracy whether the service professionals are wearing masks or face shields when they are on the job. This strategy helped the firm build confidence among customers. “We are continuing to invest in quality, training, safety and hygiene,” said Bhal.
 

The firm also focused on a lot of employee initiatives during the pandemic, which helped the team grow stronger. This played a key role in business recovery. Bhal said there were no pay cuts at the firm, which has over 1,000 employees. And it has advanced the appraisal cycle to January 2021. The company recently announced an employee stock sale programme worth $5 million (Rs 37.5 crore). Under this programme, employees would be given the option to liquidate their vested ESOPs, which would be purchased through a secondary transaction by the existing investor Vy Capital. All existing employees with vested ESOPs are eligible to participate in the current sale programme.

It also started an initiative that would allow employees to take unlimited sick leaves in case they are suffering from any form of mental or physical illness, particularly Covid-19. It is making some of the top psychologists of the country accessible to its employees by partnering with a mental wellness platform. The firm has hired more than 400 people since mid-March. They include people to whom it had already rolled out offers before the pandemic. “We wanted to ensure that we stood strongly with our employees during this time,” said Bhal. “I think it's important to remind ourselves that it (Covid-19) is a humanitarian crisis and we should never forget the humans.”
 

Urban Company largely earns its revenues from commission fee on every transaction facilitated by its online platform. In May this year, the firm reported a 103 per cent surge in its unaudited FY20 operating revenues over a year earlier (IND-AS accounting method) – from Rs 106 crore in FY19 to Rs 216 crore in FY20. The net booking value of all transactions through the Urban Company platform grew 138 per cent from Rs 385 crore in FY19 to Rs 918 crore in FY20.
 

Urban Company: Positive outlook

• The company is gearing up for an IPO by 2023.
• It recently crossed 140 per cent of its pre-covid business.
• It offers services like beauty and spa at home, cleaning, plumbing, carpentry, appliance repair, painting through website and app.
• The company has over 1,000 employees and works with more than 27,000 service partners.
• It operates in 18 cities of India and 4 international markets of Dubai, Abu Dhabi, Sydney and Singapore.
• The firm plans to expand in Tier-II and -III cities across the country in the next few years.
• In May this year, the firm reported a 103% surge in its unaudited FY20 operating revenues over a year earlier.
• The net booking value of all transactions through the Urban Company platform grew 138% from Rs 385 crore in FY19 to Rs 918 crore in FY20.