Urban Company Reports Significant Growth in Financials

Home services marketplace Urban Company has submitted its Draft Red Herring Prospectus (DRHP) to SEBI recently. In this document, the company presented its financial results for the nine months ending December 2024, revealing an impressive growth exceeding 40% compared to the corresponding timeframe of the previous fiscal year.
Urban Company’s revenue from its operational activities surged to Rs 846 crore in the initial nine months of FY25, up from Rs 601 crore recorded in the first three quarters of FY24, as detailed in the financial statements released in the DRHP.

Overview of Services and Revenue Streams

Urban Company offers a variety of home services, including beauty and spa treatments, air conditioning repairs, electrical services, painting, wall panel installation, pest management, and more. Revenue derived from these services alone constituted 75% of the company’s total collections, which climbed 31% to Rs 639 crore within the nine months ending December FY25.

The rest of the operational revenue resulted from product sales to customers and professionals, totalling Rs 207 crore during the same timeframe. Apart from providing white-label products for salon use, the company also deals in locks, panels, and water purification (RO) systems, yielding an impressive 7X growth to Rs 75.8 crore in 9M FY25 from Rs 10.8 crore in 9M FY24.

Notably, Urban Company’s international business contributed Rs 116.4 crore of revenue during the first three quarters of FY25. The firm additionally accrued Rs 84.2 crore from other income, including interest generated from zero-coupon bonds and fixed deposits, bringing the total revenue to Rs 930 crore in the first nine months of the previous fiscal year.

Expense Management

On the expenditure side, employee benefits represented 28.5% of the total expenses, which amounted to Rs 258 crore during the initial nine months of FY25. The company allocated Rs 160 crore for advertising and promotional campaigns and incurred Rs 148 crore on procurement costs throughout the same period.

Expenditures related to professional incentives, outsourced support, logistics, warehousing, legal fees, and additional overheads resulted in an overall expense increase of 23.2%, reaching Rs 903 crore in 9M FY25, up from Rs 733 crore during 9M FY24.

For further clarity, in the complete fiscal year ending March 2024, Urban Company reported a revenue of Rs 828 crore alongside a loss of Rs 92.7 crore.

Profitability and Financial Metrics

Driven by a combination of over 40% revenue growth and stricter cost management, Urban Company managed to achieve a profit before tax of Rs 27.1 crore in the first nine months of FY25, contrasting with a loss of Rs 57.7 crore in the same period last year. The company’s Return on Capital Employed (ROCE) improved to 1.84%, while its EBITDA margin increased to 6.78%.

At a unit level, Urban Company spent Rs 1.07 for each unit of operating revenue generated. By December 2024, its total current assets reached Rs 1,514 crore, which includes Rs 591 crore in cash and bank balances.

Upcoming IPO

Urban Company aims to secure Rs 1,900 crore through its initial public offering (IPO), which involves a fresh issue of Rs 429 crore and an offer for sale (OFS) amounting to Rs 1,471 crore. The price range for the company, backed by Tiger Global, has not yet been revealed. As part of the OFS, several investors, including Accel, VY Capital, Prosus, Bessemer, and Elevation Capital, will be selling part of their stakes.