Urban Company jumps 7% as Emkay sees strong growth potential ahead

Urban Company Ltd.’s share price gained 7 per cent on Monday after brokerage firm Emkay initiated coverage on the company with a ‘Buy’ rating and a target price of ₹190.

 

As of 11:54 AM, the company’s share price was trading 6.04 per cent higher at ₹168 apiece, meanwhile Nifty 50 was trading 0.25 per cent lower at 24,192.45. The company’s stock hit an intraday high of 7 per cent at ₹169.47

Emkay on Urban Company

Emkay noted that Urban Company (UC) is the leader of India's online home services market, whose large TAM and highly unorganised nature provide the company with a long growth runway. 

 

 

It added that, increasing demand density in micromarkets is driving consumer satisfaction as well as partner wages, thereby reinforcing the flywheel. “This has led to accelerating growth, and we build in 19.8 per cent FY26-29E net transaction value (NTV) Cagr for India consumer services, ex-InstaHelp (ICS).”

 

The brokerage firm noted that with high operating leverage, “we build in 47.4 per cent adjusted ebitda cagr over FY26-29E for ICS. While the street is concerned about UC’s InstaHelp foray given the upfront cash burn, we believe this is the right playbook to improve platform stickiness and drive cross-sell.” 

 

Emkay believes that UC has the opportunity to capture a large TAM and increase frequency of platform use, which should create a sticky business. “We initiate coverage on UC with a Buy rating and a target price of ₹190, based on the Discounted Cash Flow (DCF) Sum-of-the-Parts (SOTP) valuation.”

 

The brokerage further added that, “we value the ICS business at ₹16,720 crore, or ₹107 per share, based on 57.3 times FY28 estimated adjusted Ebitda and 40.5 times FY29 estimated adjusted Ebitda. The InstaHelp business is valued at ₹4,290 crore, or ₹28 per share, based on 7.1 times FY28 estimated NTV and 3.4 times FY29 estimated NTV.

   

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