Urban Company IPO Day 2: Surging Subscription and Growing GMP Highlight Investor Appetite

Urban Company’s IPO subscription closed day 2 at a robust 9.48 times overall, significantly higher than day 1’s 3.29 times. Retail investors and Non-Institutional Buyers showed strong appetite with nearly 19x subscriptions each, while QIB subscription also improved. The GMP rose steadily from ₹36.5 before listing to ₹43 on day 2, signaling bullish market expectations. Despite this strong demand, Urban Company’s mixed profitability and high valuation require investors to carefully weigh the company’s long-term growth potential against the premium priced in.

IPO Overview

• IPO Date: September 10 to September 12, 2025
• Total Issue Size: ₹1,900 crore
• Price Band: ₹98 to ₹103 per share
• Lot Size: 145 Shares
• Tentative Allotment Date: September 15, 2025
• Listing Date: September 17, 2025 (Tentative)
• Subscription Status: The Urban Company IPO has been subscribed 9.48x as of day 2.
• GMP: The GMP for Urban Company IPO is ₹43, reflecting a 41.75% gain over the issue price, according to Chittorgarh.com (as of September 12).
  Disclaimer: GMP is an unofficial indicator and is subject to market volatility.

Highlight of Day 2 of the IPO

After day 2, Urban Company’s IPO saw a dramatic increase in subscription to 9.48 times, led by massive enthusiasm from retail and non-institutional investors with subscriptions close to 19x each. Institutional demand also grew moderately. The GMP advanced further to ₹43, indicating sustained positive listing sentiment and potential for early gains. This robust subscription boost strengthens initial market optimism while investors assess underlying fundamentals.

Highlight of Day 1 of the IPO

Day 1 saw Urban Company’s IPO subscribed 3.29 times overall, with extraordinary retail interest at 7.39x subscription. Non-Institutional Buyers subscribed 4.37 times, while QIBs showed moderate participation at 1.37 times. The GMP rose from ₹36.5 pre-IPO to ₹39 on day one, reflecting positive listing expectations among investors eager to gain from the listing uptick.

This balanced insight helps investors stay aware of strong demand signals without overlooking valuation and profit nuances.

How Does Urban Company Make Money?

Urban Company is basically an app and website where you can book trained professionals for services like beauty treatments, spa, cleaning, pest control, plumbing, painting, or even repairing your fridge. Think of it like Swiggy or Zomato, but for home and beauty services instead of food. It has three main ways of making money, including charging platform service fees when customers book services, selling kits or products (like wax, shampoos, cleaning liquids, tools) to the service professionals, and direct sales to customers through its Native brand devices, such as water purifiers and smart locks.

So Urban Company earns whenever you book a service and even when its professionals buy products to provide those services.

Objectives of the IPO

From the fresh issue of ₹472 crore, the money will go here:

• ₹190 crore to build new tech and cloud systems (₹60 crore just for cloud).
• ₹75 crore for office leases.
• ₹90 crore for marketing to attract more customers.
• Up to 25% of the balance funds for general business use.

A significant, ₹1,428 crore (75% of IPO size) will go to early investors cashing out, not into the company.

Strengths:

• India’s largest online platform for home services, operating in 51 cities with 7 million+ customers.
• Trusted consumer brand with 4.79/5 average service rating.
• Strong gig worker economics,  service partners on the platform earned 30-40% more than others in FY25.
• Revenue jumped 38% YoY to ₹1,144 crore in FY25, showing growth across all segments.
• Cost efficiency is improving,  EBITDA margin turned positive at 1.1% in FY25 and further improved to 5.7% in Q1 FY26.

Risks:

• Profitability isn’t fully stable. FY25 net profit of ₹239 crore was inflated by ₹211 crore deferred tax credit. Without it, true profit was just ₹28.5 crore.
• Q1 FY26 profit crashed 55% YoY to ₹5.6 crore (excluding tax gain).
• 75% of IPO is OFS - company itself gets only a small fraction of proceeds.
• Highly fragmented and competitive industry with less than 1% online penetration - consumers still largely use local offline service providers.

For detailed information, visit Urban Company’s IPO page.

IPO Valuation

• Market Cap Post-IPO: ₹14,790 crore
• EV/Revenue: 12.45 times
• P/E Ratio: 66x

As per our calculations, Urban Company’s IPO pegs its post-issue market cap at ₹14,790 crore. On revenue multiples, it is being priced at an EV/Revenue of 12.45x (post-IPO) against 12.04x pre-issue, which is clearly on the richer side for a business still in the early stages of scaling profitability. On earnings, the stock seeks a P/E of 66x post-IPO, compared to 62.5x pre-IPO, which essentially means investors are paying ₹66 today for every ₹1 of annual profit. This is high compared to the broader market and even premium consumer internet players in India, but the company is positioning itself as a unique, category-defining platform. The argument from management and lead bankers is that Urban Company’s full-stack, tech-driven model, combined with improving operating metrics, deserves a premium, but the valuation undeniably leaves a limited margin of safety.

Disclaimer: The P/E ratio here is calculated using the company’s post-IPO equity and its most recent FY25 net profits at the upper end of the price band.

Who’s Leading Urban Company?

Urban Company was founded in 2014 by Abhiraj Singh Bhal, Raghav Chandra, and Varun Khaitan, three IIT alumni who wanted to professionalize India’s fragmented local services market. Today, they still hold nearly 20% combined stake.

Abhiraj Singh Bhal (CEO & MD) leads strategy and company vision. Under his leadership, UC expanded to the UAE and Singapore and is now a household brand in India’s metros. CTO & Product Head, Raghav Chandra, is a tech mind with stints at Twitter (now X) before Urban Company. Known for embedding deep tech automation into the business. He was featured in Forbes 30 under 30. While Varun Khaitan, the COO, handles day-to-day operations. His focus has been on scaling service delivery and keeping Indian consumer services profitable.

Apart from the founders, the board has strong names like Rajesh Gopinathan (ex-TCS CEO), Ireena Vittal (strategy expert), and Ashish Gupta (VC veteran), showing maturity in governance.

Industry Outlook

India’s home services market is huge at $60 billion (₹5.28 lakh crore) in FY25, set to touch $100 billion by FY30 (10, 11% CAGR). But the online part is less than 1% today, meaning massive room for growth. Rising urban incomes, nuclear families, and busier lifestyles will drive demand for reliable platforms like Urban Company. However, it remains a market where offline competition is strong, and brand trust will be key.

Who’s Making Money via the IPO OFS: Selling Shareholders

A key element in Urban Company’s IPO structure is the significant OFS portion of ₹1,428 crore, where early investors are partially exiting. This does not bring fresh funds for the company but allows existing shareholders to unlock their investments.

Accel India IV (Mauritius) Limited is selling shares worth ₹390 crore, booking a 27.3x return on its investment, Bessemer India Capital Holdings II Ltd is cashing out ₹173 crore, translating into a 14.4x return, while Elevation Capital V Limited will exit ₹346 crore worth of shares, making 19.1x returns. Tiger Global’s Internet Fund V Pte. Ltd. is selling ₹303 crore worth of holdings but with a modest 1.7x multiple and VYC11 Limited joins with a ₹216 crore sell-off, netting out a 5x return.

These numbers highlight that while some early backers are making blockbuster gains, others are taking more modest exits, reflecting varied investment cycles and entry valuations. More importantly, the heavy OFS tilt means investors should note that three-fourths of this IPO proceeds are going out to selling funds rather than fueling Urban Company’s growth plans.

Analyst View

Urban Company’s IPO subscription after day 2 closed with a strong overall subscription of 9.48 times, nearly triple the day 1 close of 3.29 times. Retail investors and Non-Institutional Buyers led the demand vigorously with 18.67x and 19.15x subscriptions respectively, both significantly higher than their day 1 levels. QIB demand also showed a modest improvement from 1.37x to 1.56x, reflecting rising confidence among institutional investors. Meanwhile, the GMP steadily climbed from ₹36.5 before the IPO to ₹39 on day 1 and further to ₹43 on day 2. This upward GMP trend signals strong market expectations of a positive listing with potential premium gains.

However, while high subscription and GMP numbers underline robust initial enthusiasm and demand, investors should weigh this against the company’s fundamentals. Urban Company demonstrates promising operational growth and improving margins, but its profitability remains inconsistent. The IPO valuation is priced for high growth, and a significant portion of shares are being offered by early investors through the OFS route, which limits fresh capital for expansion. This mix suggests attractive short-term demand but calls for a careful assessment of whether the growth prospects justify the premium and the investment risks.

Overall, the day 2 figures and GMP trends confirm a strong market reception and momentum, but diligent evaluation of long-term value is advised before making investment decisions.

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Disclaimer

Source: Urban Company's RHP. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Please be informed that merely opening a trading and demat account will not guarantee investment in securities in the IPO. Investors are requested to do their own independent research and due diligence before investing in an IPO. Please read the SEBI-prescribed Combined Risk Disclosure Document prior to investing. This post is for general information and awareness purposes only and is nowhere to be considered as advice, recommendation, or solicitation of an offer to buy or sell, or subscribe for securities. INDstocks is acting as a distributor for non-broking products/services such as IPO, Mutual Fund, and Mutual Fund SIP. These are not exchange-traded products. All disputes with respect to the distribution activity would not have access to the Exchange investor redressal forum or the Arbitration mechanism. INDstocks Private Limited (formerly known as INDmoney Private Limited) does not provide any portfolio management services, nor is it an investment adviser. Logos above are the property of respective trademark owners, and by displaying them, INDstocks has no right, title, or interest in them. SEBI Stock Broking Registration No: INZ000305337, Trading and Clearing Member of NSE (90267, M70042) and BSE, BSE StarMF (6779), SEBI Depository Participant Reg. No. IN-DP-690-2022, Depository Participant ID: CDSL 12095500, Research Analyst Registration No. INH000018948 BSE RA Enlistment No. 6428.