The ₹1,900-crore IPO of home services marketplace Urban Company was fully subscribed within hours of its launch on Wednesday, closing the day with an overall subscription of more than three times the shares on offer. The frenzy was primarily fueled by a massive surge in demand from retail investors and non-institutional buyers. The IPO’s success is expected to fuel India’s $60 billion home services industry, projected to reach $100 billion by 2030 at a 10–11% CAGR.
At the heart of Day 1’s success was the overwhelming response from retail individual investors, whose portion was oversubscribed nearly seven times. The company has, since its inception, developed a loyal customer base, with 84% of revenue coming from repeat users, and its strong employee subscription rate (oversubscribed nearly six times) further reinforces internal belief in the company’s value proposition. Overall, the IPO was subscribed 3.13 times by the end of the first day. Non-Institutional Investors (NIIs) subscribed 4.16 times, while Qualified Institutional Buyers (QIBs) subscribed a total of 1.31 times (bids for 33.3 crore shares were received during the period, against 10.6 crore shares on offer).
The IPO is a mix of a fresh issue worth ₹472 crore and an offer-for-sale (OFS) of ₹1,428 crore by existing investors, including early backers Accel and Elevation Capital. The fresh capital will fund technology upgrades, cloud infrastructure, office leases, and marketing. Meanwhile, the OFS provides lucrative exits for early investors, with Accel and Elevation selling at significant multiples. Anchor participation also included global funds like Fidelity and the Government Pension Fund Global, further validating Urban Company’s standing on the international stage.
Ahead of the IPO, Urban Company raised ₹854 crore from anchor investors by allotting 8.29 crore shares at ₹103 each. Notable participants included SBI Life Insurance, ICICI Prudential, HDFC MF, and Nippon MF. The global vote of confidence was further bolstered by Dutch investor Prosus, which recently pegged Urban Company’s fair value at $2.4 billion earlier this year. The IPO’s Grey Market Premium (GMP) surged to ₹35, implying a potential listing gain of ~35%. The GMP more than doubled from ₹10 to ₹28 in the days before launch as well.
While the IPO’s initial performance is impressive, analysts remain divided on its long-term investment potential, with valuation being a central point of contention. At the upper end of the price band of ₹103, Urban Company is valued at approximately ₹14,800 crore. This places it at a premium to some listed peers, leaving limited headroom for short-term listing gains. The company reported a net profit of ₹240 crore on revenues of ₹1,145 crore in FY25, its first profitable year. However, much of this was aided by a ₹211 crore deferred tax credit, with pre-tax profit at just ₹28 crore—a detail that has prompted experts to question the sustainability of earnings. Despite this, firms like Deven Choksey Research have issued a ‘subscribe’ rating, calling the IPO “fairly priced” given the vast and underpenetrated home services market in India.
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