Kotak Institutional Equities has initiated coverage on Urban Company with a sell rating and a target price of ₹120 per share, stating that while the platform remains a leading full-stack operator in home services across India, the UAE, Singapore and Saudi Arabia, the current valuations already capture a significant portion of the company’s medium-term growth potential. The brokerage highlighted the multi-category nature of Urban Company’s model, supported by professional service supply, training infrastructure and a managed marketplace layer, but noted that profitability challenges remain uneven across business lines.
Kotak Institutional Equities modelled a steady 17% net transaction value (NTV) CAGR for the India consumer services business and a stronger 33% NTV CAGR for the international business over FY2025–28, reflecting deeper market penetration and rising wallet share in newer geographies. The brokerage added that the India consumer services vertical could deliver a healthy 38% CAGR in adjusted EBITDA during the same period, helped by improved utilisation and scale efficiencies. However, it cautioned that the Insta Help business will continue to require investments, delaying profitability and weighing on consolidated earnings.
The note added that the company’s long-term growth prospects remain intact, but the risk-reward skews unfavourably at current valuations, with the stock pricing in aggressive expansion and margin recovery assumptions. Kotak Institutional Equities therefore initiated with a sell recommendation, citing limited upside from present levels.
Disclaimer: The views and recommendations above are those of Kotak Institutional Equities. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
