Urban Company’s Rs 1,900 crore initial public offering (IPO)’s retail, employee portion was fully subscribed within the first hour of opening on Wednesday, driven by robust interest from retail investors. Bidders placed orders for 62 million shares, or 58 per cent of the 107 million shares on offer. Within hours of opening, the IPO was subscribed 1.01 times overall, with the employee quota nearly three times. Retail investors showed strong interest, bidding 3.02 times their allotted shares, while non-institutional investors subscribed 1.29 times. A fully subscribed IPO means that investor demand meets or exceeds the total number of shares offered. Urban Company has set a price band of Rs 98-103 per share, valuing the company at approximately Rs 15,000 crore ($1.7 billion) at the upper end.
IPO subscription still open
The offer comprises a fresh issue of Rs 472 crore and an offer-for-sale of Rs 1,428 crore from existing investors, including Accel, Elevation Capital, Tiger Global, Vy Capital, and Bessemer Venture Partners. The IPO subscription window remains open until September 12.Meanwhile, the allotment will be on September 15 with listing of the shares on NSE, BSE set for September 17. Prior to the public offering, the company raised Rs 854 crore from anchor investors such as GIC, Fidelity, and Norges Bank. Last week, a Rs 500-crore secondary sale was completed, where SBI Mutual Fund and Permira acquired shares at Rs 103 each from early investors Tiger Global and Accel. Existing investors Prosus and Elevation Capital also increased their stakes ahead of the IPO.
Should one subscribe?
Brokerages recommend a long-term approach to Urban Company’s IPO, citing the company’s strong position in the largely unorganised Rs 60 billion home services market and its potential to expand into new service segments.“Conservative investors might prefer to wait for more attractive entry points, but those optimistic about the formalization of India’s home services sector should consider this IPO,” said stock market broker Anand Rathi, as quoted by Economic Times Urban Company Limited (UCL) caters to urban consumers with a wide range of household services. Its Net Transaction Value (NTV) and revenue are projected to grow at a compound annual growth rate of 25.5 per cent and 34.1 per cent, respectively, between FY23 and FY25. EBITDA is expected to break even by FY26. At the upper end of the IPO price band, UCL is valued at a post-issue Price-to-Sales (P/S) multiple of 12.9x. SBI Securities Research advises subscribing with a long-term investment horizon. Founded in 2014, Urban Company operates across two major segments: beauty and wellness, offering salon treatments, spa services, and laser hair reduction; and home repairs and maintenance, including plumbing, electrical work, carpentry, cleaning, pest control, appliance repair, and painting. The company’s operating revenue grew 38 per cent to Rs 1,144 crore in FY25. It also posted a net profit of Rs 240 crore, a turnaround from a Rs 93 crore loss in FY24.(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)
