Investors have reacted strongly to the company’s widening losses in the second quarter. But brokerages are a divided lot, with a few confident that Urban Company will continue growing
Home services provider Urban Company’s second-quarter performance has left the street divided.
The startup, which in September completed a year as a listed entity, delivered a mixed performance in the results that were declared after market hours on Friday. Its losses tripled to ₹182.5 crore from a year ago, driven by the heavy investments in the highly competitive quick-service business. It fared better in the rest of the metrics, with revenue rising 41 per cent to ₹537.3 crore from ₹380 crore a year ago.
In fact, excluding InstaHelp, its instant help platform, Urban Company generated an EBITDA of ₹30 crore, a jump of 213 per cent YOY.
Not surprisingly, Urban Company’s stock took a beating when the markets opened on Monday. The stock opened lower at ₹149.05, falling sharply from the previous close of ₹158.12. By 1pm, the stock was down 9 per cent.
Yet, not every brokerage house agrees with the market’s reaction. Of nine brokerage houses covering the stock, three have a BUY rating, two are at HOLD, and four maintain a SELL call. The contention centres around Urban Company’s ability to keep growing the core business’s profitability even as it continues with heavy investments in InstaHelp.
Two of the brokerages—Emkay Global Financial Services and UBS—remain bullish on Urban Company. While Emkay Global has a target of Rs 200, UBS puts it at Rs 180. Emkay considers the market reaction an “excess” and believes that the low market penetration of Urban Company’s core business leaves a lot of scope for future growth. UBS is also betting on the company to multiply its long-term lifetime value (LTV).
LTV is the total net profit the company expects to earn from a customer.
On the other hand, Kotak Institutional Equities and BofA Global Research strike a more cautious stance. Kotak cites increasing competition from instant help peers Snabbit and Pronto to argue that Urban Company will be forced to continue burning cash at a high run rate. As it is, InstaHelp’s loss per order of ₹279 is higher than Snabbit’s ₹225.
The additional worry for Urban Company investors would be Snabbit’s rise. In the second quarter, Snabbit fulfilled more orders, had a slightly higher net transaction value and a lower EBITDA loss as compared to Urban Company’s InstaHelp.
Despite the widening losses and increasing competition, Urban Company’s co-founder and CEO Abhiraj Singh Bahl struck a bullish tone at the earnings call. He defended the company’s ₹174 crore cash burn in InstaHelp during the second quarter. “We regard this as the cost of building habit while the category is being formed, not as the steady-state price of the service,” he said.
On the competition, he said: “Should the competitive intensity in InstaHelp rise, we have both the balance sheet and the intent to respond in full.”
True to his word, the company’s board at its meeting on Friday also approved a proposal to raise ₹2,500 crore via a qualified institutional placement. The fundraise is primarily to help scale InstaHelp.
It’s not that the company has much choice, as its peers have been aggressively shoring up funds. In April, Snabbit raised $56 million in a Series D round. Similarly, Pronto had two quick fund raises this year, mopping up a total of $45 million.
While the fundraise shows that investors are interested and see potential in this emerging segment, experts also warn of a war to the bottom. Snabbit, which spends ₹16 for every rupee it earns, incurred losses of ₹168 crore in the 2026 financial year. It had an operating revenue of just ₹12.25 crore. Similarly, Pronto is estimated to burn nearly ₹30 crore every month in the fight for higher market share. Both Snabbit and Pronto are privately held.
The big question then is, who among the three will be able to continue burning cash and sustain a loss-making operation?
