Urban Company IPO: DRHP filed for ₹1900 Crore public issue; Key details, financials, risks explained

Urban Company, a name familiar to many households across India for connecting users with professionals for services like cleaning, beauty treatments, and home repairs, is taking a significant step towards becoming a publicly listed company. The popular app-based platform is preparing for its Initial Public Offering (IPO), a move that transitions it from a venture capital-backed startup into the realm of the public stock market.  

Signalling its formal intent, Urban Company filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on April 28th, 2025, with the filing appearing on the SEBI website by April 30th, 2025. This document lays out the groundwork for its proposed listing on Indian stock exchanges. You can track it in Urban Company IPO page on ticker.  

This article aims to break down the essential details from Urban Company's DRHP providing a clear guide to understand the key aspects of this upcoming IPO. We will delve into the offer size, how the company plans to use the funds, its financial health, the roles of existing shareholders, and the potential risks and opportunities involved.

What Does Urban Company Do? A Quick Look

At its core, Urban Company operates as a technology-driven online marketplace. It serves as a bridge, connecting customers needing services with trained and vetted independent service professionals. The platform offers a wide array of services primarily focused on home maintenance and personal beauty care.  

Customers can use the Urban Company app or website to book services such as:

• Beauty and Wellness: Salon treatments, spa therapies, massages, hair grooming.  
• Home Cleaning: Deep cleaning, kitchen/bathroom cleaning, sofa cleaning.  
• Repairs and Maintenance: Plumbing, electrical work, carpentry, appliance servicing and repair, AC servicing.  
• Other Services: Pest control, painting, home furnishing solutions like wall panel installation.  

These services are delivered directly at the customer's convenience, typically in their homes. The company is widely recognised as the leading platform in India's home services sector, bringing structure and reliability to a market traditionally dominated by fragmented, unorganised players offering inconsistent quality and pricing.  

Urban Company's reach extends beyond just a few major cities. As of December 31, 2024, it operated in 59 cities globally. This includes a strong presence across 48 cities in India, alongside international operations in the United Arab Emirates (UAE), Singapore, and the Kingdom of Saudi Arabia.  

The Urban Company IPO: Breaking Down the Numbers

Urban Company's proposed IPO aims to raise a total of ₹1,900 crore from the public market. The public issue is structured into two distinct components:  

1. Fresh Issue: The company itself will issue new equity shares aggregating to ₹429 crore. The proceeds from this portion will flow directly into Urban Company's coffers to fund its future plans.
    
2. Offer For Sale (OFS): Existing shareholders of the company will sell a portion of their current holdings, amounting to ₹1,471 crore. The money raised through the OFS will go to these selling shareholders, not to the company.  

The DRHP also mentions the possibility of a pre-IPO placement, where the company might issue shares worth up to ₹85.8 crore to select investors before the main IPO opens to the public. Should this placement occur, the size of the fresh issue component in the main IPO could be reduced accordingly.

The structure of the IPO can be summarised as follows:

Table 1: Urban Company IPO Structure

Source: DRHP Filings  

A key observation is the relative size of the two components: the Offer For Sale is substantially larger than the Fresh Issue, approximately 3.4 times bigger. This structure suggests that a primary motivation behind the IPO is to provide a formal exit route for some of the company's early financial backers, allowing them to liquidate part of their investment and realise returns.

While common for startups reaching the IPO stage, the significant size of the OFS relative to the fresh capital being raised might imply that the company feels its immediate capital needs for stated objectives are relatively modest, perhaps reflecting its recent improvements in financial performance and existing cash reserves.  

It's also noteworthy that the final ₹1,900 crore IPO size represents a considerable scaling back from earlier market speculation and reports that suggested a potential issue size closer to ₹3,000 crore. The fresh issue component itself was trimmed from a board-approved limit of ₹528 crore down to the current ₹429 crore outlined in the DRHP.

This reduction is consistent with a broader trend observed among startups potentially adjusting their IPO plans in response to market volatility and investor sentiment. It likely reflects a pragmatic approach by Urban Company, possibly prioritising a successful listing at a valuation the market is comfortable with, rather than maximising the funds raised at this juncture.  

Who's Cashing In? Investors and the OFS

The ₹1,471 crore Offer For Sale (OFS) component of the IPO provides a mechanism for several early and significant investors in Urban Company to partially monetise their holdings. The DRHP identifies the key selling shareholders participating in the OFS:  

• Accel India: Set to be the largest seller, offloading shares worth up to ₹433 crore.  
• Elevation Capital: Planning to sell shares worth up to ₹346 crore.  
• Tiger Global (via Internet Fund V Pte. Ltd): Aiming to sell shares worth up to ₹303 crore.  
• VY Capital (via VYC11 Ltd): Intending to sell shares worth up to ₹216 crore.  
• Bessemer India Capital Holdings II Ltd: Proposing to sell shares worth up to ₹173 crore.  

These venture capital firms and investment funds backed Urban Company during its earlier growth phases. The IPO presents a crucial opportunity for them to realise returns on these investments, potentially achieving substantial multiples. For instance, Accel India, an investor since the seed stage, reportedly acquired shares at a weighted average cost of just ₹3.61 apiece, while Tiger Global, which entered later (Series E), had an average acquisition cost of ₹60.25 per share. The final return multiple will depend on the IPO pricing, but these figures suggest potentially significant gains for early backers.

In a move likely to be viewed positively by prospective public market investors, the company's co-founders – Abhiraj Singh Bhal (CEO), Varun Khaitan, and Raghav Chandra – are not selling any of their personal shareholdings as part of the IPO's OFS. This decision suggests confidence from the founding team in the company's future prospects beyond the listing and aligns their interests more directly with new shareholders coming in through the IPO. Post recent secondary transactions, the three founders collectively hold approximately 20.1% of the company, with each founder retaining about a 6.67% stake.

However, it is important to contextualise the founders' decision not to participate in the OFS. Between September 2024 and March 2025, prior to the DRHP filing, the co-founders collectively sold shares worth a substantial ₹779.08 crore (₹259 crore each) through secondary market deals. These shares were acquired by existing investors, including Prosus Ventures, Dharana Capital, Think Investments, former ITC executive Sanjiv Rangrass, SailThru Ventures, and Swiggy co-founder Sriharsha Majety.

Funding the Future: How Urban Company Plans to Use IPO Funds

The capital raised from the fresh issue of shares, amounting to ₹429 crore, is earmarked for specific strategic initiatives aimed at fuelling future growth and strengthening Urban Company's operational capabilities. The DRHP outlines the proposed utilisation of these net proceeds:  

• Technology Development and Cloud Infrastructure (₹190 crore): This represents the largest allocation, underscoring the company's foundation as a technology platform. These funds are planned to be deployed over three fiscal years: ₹42 crore in FY2026, ₹74 crore in FY2027, and ₹74 crore in FY2028.
  
  This investment is crucial for enhancing the user experience, improving operational efficiency (potentially including tools for managing its extensive network of service professionals), scaling the platform to handle growth, maintaining a competitive edge through innovation (perhaps incorporating more AI/ML for better matching or dynamic pricing ), and supporting the infrastructure needed for newer ventures like the 'Native' product line.
   
• Marketing and Brand-Building Activities (₹80 crore): A significant sum is dedicated to increasing brand visibility, acquiring new customers, and reinforcing its market position. This highlights the ongoing need for marketing spend to drive growth in a competitive landscape. It suggests that relying purely on organic growth or word-of-mouth may not be sufficient to meet expansion targets, and paid marketing remains a key operational lever, influencing overall profitability.  
   
• Lease Payments for Offices (₹70 crore): Funds allocated to cover lease obligations for existing and potentially new office spaces, likely to support administrative functions and potentially training facilities as the company grows.  
   
• General Corporate Purposes (Approx. ₹89 crore): The remaining amount will be used for general operational needs, working capital, and other corporate requirements that may arise.  

The planned allocation of the fresh issue proceeds is summarised below:

Table 2: Urban Company IPO - Use of Fresh Issue Proceeds

Source: DRHP Filings  

Financial Health Check: Revenue Growth and the Path to Profit

Urban Company's financial trajectory reveals a story of rapid growth alongside a recent, significant shift towards profitability, albeit with important nuances.

1. Revenue Trends: The company has demonstrated consistent top-line expansion over recent years.

• Following substantial growth in FY22 and FY23, revenue from operations reportedly reached ₹827 crore in FY24 (fiscal year ending March 2024), marking a 30% increase from ₹637 crore in FY23. (Note: Some sources like cite a slightly higher FY24 revenue figure of ₹928 Cr, potentially including other income; the ₹827 Cr figure aligns with operational revenue mentioned in multiple reports based on DRHP data.)  
   
• This momentum continued into the current fiscal year. For the first nine months of FY25 (April to December 2024), Urban Company's revenue from operations surged by 41% year-on-year, reaching ₹846 crore compared to ₹601 crore in the corresponding period of FY24.  

2. Profitability Picture: After reporting significant losses in preceding years, including ₹514 crore in FY22 and ₹312 crore in FY23, and narrowing the loss to ₹93 crore in FY24, Urban Company achieved profitability in the first three quarters of FY25.  

• Profit Before Tax (PBT): The company reported a PBT of ₹27.1 crore for 9M FY25. This marks a significant turnaround from a Loss Before Tax of ₹57.8 crore recorded in 9M FY24. This positive PBT figure suggests that the core operations became profitable during this period.  
   
• Profit After Tax (PAT): The headline net profit (PAT) for 9M FY25 stood at ₹242.6 crore.  
   
• The Deferred Tax Gain Nuance: It is absolutely critical for investors to understand that the substantial PAT figure is heavily influenced by a one-time accounting adjustment. The company recognised a deferred tax gain of ₹215.5 crore in 9M FY25, primarily related to the utilisation of past business losses against current profits for tax purposes. Excluding this non-operational, non-recurring gain, the profit for the period aligns with the PBT of ₹27.1 crore.
  
  While the positive PBT is encouraging, the headline PAT number does not fully reflect the underlying operational profitability achieved during those nine months. Future profitability will depend on sustaining and growing the operational profit (PBT), as the large deferred tax gain effect is temporary.  

3. Growth Drivers (9M FY25): The revenue surge in the first nine months of FY25 was driven by growth across different segments:

• Core Indian Home Services: Revenue from platform services (commissions, fees) in India grew by 31% year-on-year to ₹639 crore. This was supported by a 10% increase in annual transacting users (to 6.5 million) and a rise in net transaction value.  
   
• 'Native' Brand Products: Sales of products under the Native brand (primarily RO water purifiers and electronic locks) experienced explosive growth, increasing nearly sevenfold year-on-year to ₹76 crore from ₹11 crore. This successful diversification leverages the existing platform and customer base, potentially offering higher margins and reducing reliance solely on service commissions.  
   
• International Business: Revenue from international markets (UAE, Singapore, Saudi Arabia) grew by a strong 83% to ₹116.5 crore, contributing nearly 14% of total operating revenue. However, as noted elsewhere, this growth likely comes with significant investment and a longer path to profitability.  

4. Operational Efficiency: Encouragingly, while revenue grew 41% in 9M FY25, total expenses increased at a slower rate of 23%, rising to ₹903 crore from ₹733 crore in 9M FY24. This suggests improving operational leverage, where revenue growth is outpacing cost growth, contributing to the positive PBT. Key expense categories included employee benefits (₹258 Cr), procurement costs related to product sales (₹148 Cr), and advertising/promotional activities (reported as ₹160 Cr or ₹131 Cr in different analyses of the DRHP data).  

Table 3: Urban Company Financial Snapshot (9M FY25 vs 9M FY24)

Source: DRHP Filings, News Reports *Note: PAT for 9M FY25 includes a significant one-time deferred tax gain of ₹215.5 Cr. PBT provides a clearer view of operational profitability during the period.  

Strengths: What Makes Urban Company Appealing?

Urban Company possesses several key strengths that have contributed to its growth and market position, making its IPO noteworthy:

• Market Leadership and Brand Trust: The company is widely acknowledged as the leading organised player in India's burgeoning home services market. Through its consistent service delivery and focus on customer experience, it has managed to build significant brand recognition and trust among urban consumers. This trust is a crucial asset in a sector previously marred by unreliability.
   
• Robust Technology Platform: At its heart, Urban Company is a technology company. Its user-friendly mobile app and website provide a seamless booking and management experience for customers. The underlying technology infrastructure also enables efficient matching of customers with professionals, scheduling, payments, and overall operational management.  
   
• Wide Service Portfolio and Quality Focus: Urban Company offers a comprehensive range of services, reportedly covering over 100 categories, catering to diverse household needs. Crucially, it differentiates itself through a focus on quality. Service professionals undergo a vetting process, including background checks and skill assessments, and often receive standardised training to ensure a certain level of service quality and safety.  
   
• Scalable Business Model: The marketplace model, facilitated by technology, is inherently scalable. It allows Urban Company to expand its operations to new cities and potentially new countries relatively quickly compared to traditional service businesses with heavy physical infrastructure.  
   
• Transparent Pricing: The platform typically provides clear, upfront pricing for standardised services, which enhances user confidence and removes the uncertainty often associated with negotiating prices in the unorganised sector.  

The combination of these strengths – a trusted brand, convenient technology, a wide array of vetted services, and transparent pricing – creates a compelling value proposition for its target audience: urban consumers seeking reliable and convenient solutions for their home and personal care needs. This addresses major pain points associated with the traditional, unorganised services market. This positive customer experience fosters repeat usage (reportedly, 77% of revenue comes from repeat customers ) and attracts more users and service professionals to the platform, creating a virtuous cycle or network effect that strengthens its competitive position.  

However, the strength of scalability is closely tied to the company's ability to manage the inherent complexities that arise with growth. Maintaining consistent service quality across tens of thousands of independent professionals in numerous diverse locations, and effectively managing relationships within this large gig workforce, remain ongoing operational challenges that need continuous investment and attention. Successful scaling is not merely about geographic expansion, but about preserving the quality and reliability that built the brand in the first place.  

Risks & Hurdles: What Should Investors Consider?

Despite its strengths and growth trajectory, Urban Company faces several significant risks and challenges that potential IPO investors should carefully evaluate:

• Gig Economy Model Risks: The company's heavy reliance on a large network of independent service professionals (gig workers) is central to its business model but also presents substantial risks :
  • Regulatory Uncertainty: The classification and treatment of gig workers under labour laws remain a grey area in India and other jurisdictions. Potential regulatory changes mandating minimum wages, benefits (like insurance or social security), or specific working conditions could significantly impact Urban Company's cost structure and operational flexibility.  
  • Worker Relations and Welfare: Ensuring fair practices, timely payments, and addressing worker grievances are crucial. Past instances of worker dissatisfaction or protests, sometimes linked to algorithmic changes affecting earnings or autonomy, highlight the potential for operational disruptions and negative publicity. Maintaining a positive relationship with its service partners is vital.  
  • Quality Control: Ensuring consistent service quality and customer experience across thousands of independent professionals is an ongoing challenge. Lapses in quality can damage brand reputation.  
  • Partner Churn: High turnover among service professionals could increase recruitment and training costs and potentially affect service availability or quality.  
   
• Profitability Sustainability: As highlighted earlier, while the company achieved operational profitability (positive PBT) in 9M FY25, this was modest, and the headline PAT was significantly boosted by a one-time tax gain. Maintaining and growing profitability consistently in the future is not guaranteed and depends heavily on continued revenue growth, managing costs effectively, and navigating competitive pressures.  
   
• Intense Competition: The home services market is becoming increasingly competitive. Urban Company faces pressure from other organised online platforms (like Housejoy, backed by Amazon), specialised service providers, and potentially larger tech companies entering the space, alongside the vast network of traditional, unorganised local service providers. This competition could lead to price wars or increased marketing expenditure, potentially squeezing profit margins.  
   
• Data Security and Privacy: As a digital platform handling vast amounts of customer and service professional data, Urban Company is vulnerable to cybersecurity threats and data breaches. Any significant breach could result in financial penalties, legal liabilities, and severe damage to customer trust.  
   
• Brand Reputation Management: The company's brand is one of its key assets. Negative publicity arising from poor service experiences, safety incidents, worker disputes, or data privacy issues could quickly erode customer confidence and loyalty.  
   
• ESOP Dilution: Urban Company has utilised Employee Stock Ownership Plans (ESOPs) extensively to attract and retain talent, a common practice in tech startups. In FY24, share-based payment expenses reportedly constituted 6.9% of revenue. Continued issuance of ESOPs, while important for employees, can lead to a gradual increase in the total number of shares outstanding, potentially diluting the ownership stake and earnings per share for public shareholders over time.  

The constellation of risks associated with the gig worker model appears particularly critical. Given its centrality to the business, any significant regulatory shifts or persistent challenges in managing worker relations and quality could fundamentally alter the company's economics and long-term viability. This represents perhaps the most significant area of uncertainty for investors. Furthermore, the interplay between rising competition and the need for sustainable profitability is crucial. Competitive pressures might force increased spending or price adjustments, making the path to consistent, healthy margins more challenging.  

Going Global: Urban Company's International Moves

While India remains its core market, Urban Company has made strategic forays into international territories, including the UAE, Singapore, and Saudi Arabia. These operations represent a potentially significant long-term growth avenue.  

International business demonstrated strong growth in the first nine months of FY25, with revenue increasing by 83% year-on-year to ₹116.5 crore, accounting for nearly 14% of the company's total operating revenue during that period.  

However, international expansion comes with its own set of challenges and costs. The company's leadership has acknowledged that achieving profitability in markets like Saudi Arabia and Singapore is likely to require more time and investment compared to its established Indian operations.  

Final Thoughts: The Urban Company IPO Buzz

The upcoming Initial Public Offering of Urban Company is undoubtedly a significant event for the Indian stock market and the broader startup ecosystem. It brings a prominent consumer technology company, a leader in the rapidly evolving home services sector, into the public domain.  

The company presents a compelling growth story, underpinned by strong revenue increases, clear market leadership in India, and a recent, encouraging turn towards operational profitability. Its technology platform, recognised brand, diverse service offerings, and the particularly rapid expansion of its 'Native' product line are key attractions for potential investors.  

However, the investment proposition is not without considerable risks that warrant careful consideration. The challenges inherent in its gig worker-dependent model – including regulatory uncertainties, worker relations, and quality control – are paramount. Achieving consistent, sustainable profitability beyond the recent boost from a deferred tax gain remains a key hurdle, especially amidst intensifying competition. Potential equity dilution from ongoing ESOP issuance is another factor to monitor.  

The IPO structure itself, featuring a large Offer For Sale component, clearly indicates that providing liquidity for early investors is a major objective. Encouragingly, the founders are retaining their stakes through the IPO, signalling belief in the company's future. The fresh capital raised will be strategically deployed into technology, marketing, and infrastructure, aiming to support continued growth.  

Ultimately, the success of the Urban Company IPO will serve as an important barometer of investor appetite for Indian consumer technology businesses in the current market climate. Its reception and subsequent performance as a listed entity will be closely scrutinised by market participants and other startups contemplating their own public market journeys.  

Disclaimer: This blog post is intended for informational purposes only and should not be construed as investment advice or a recommendation to buy, sell, or hold any securities. Investing in IPOs involves significant risks, including the potential loss of principal. All information presented here is based on publicly available sources, including the Draft Red Herring Prospectus (DRHP) filed with SEBI and various news reports, as of the dates indicated in the source material. IPO details such as the final price band, issue dates, and allotment procedures are subject to change and will be announced by the company and its managers in due course. Potential investors should conduct their own thorough due diligence, carefully read the final Red Herring Prospectus (RHP) and other offer documents when available, and consult with a qualified and certified financial advisor before making any investment decisions.