Urban Company : Fundamental Analysis

Urban Company Ltd., a market leader in the online home services market, has recently made its debut in the Indian stock market with a listing gain of 50%+.

Finology Research Desk has analysed the company this week, providing an insight into its business model, pros and cons. Find out in this article.

What Makes the Home Services Industry Special?

The Indian home services market was valued at Rs 5.1 lakh crore in FY25, and is expected to grow at ~10% CAGR to reach Rs 8.4 lakh crore by FY30. This growth is being fuelled by rising urbanisation, wider internet access, higher disposable incomes, and increasingly busy lifestyles. The home services market covers a wide range of services, from beauty and grooming to home repairs and renovation, with cleaning and pest control forming the largest segment with a 19% share, followed by care at home(16%), home renovation and upgradation (13%), beauty and wellness (12%), and handymen services (11%). Other categories like home painting, cooks, appliances and repairs together account for about 28%, highlighting the broad and diversified nature of the home services market.

Source: RHP

In 2024, only around 2% of Indian households used online home services, compared to over 50% in the US and 21% in China, highlighting high growth potential in the industry.

Overall, the Indian home services industry comprises three types of players:

Online full-stack platforms – Digital platforms like Urban Company connect customers with service providers online. Some specialise in a single category, like beauty or home services, while others, cover multiple categories on a single platform. These companies onboard, train service professionals and provide the tools or products needed to deliver their services.

Offline organised players – Offline organised players are structured businesses like appliance manufacturers with service dealerships, painting companies, and cleaning agencies that offer home services. Beauty home services are largely absent in the offline organised segment.

Unorganised local providers – These are small businesses or individual professionals, such as local salons, electricians, plumbers, cleaners, gardeners, etc., providing home services to the customers.

Source: RHP

The overall home services market is still largely dominated by unorganised local service providers with a 90.5% market share as of FY25. The industry is steadily shifting towards a more organised sector, with the collective share of offline organised players and online platforms expected to reach 10.8% by FY30 from 9.5% in FY25.

Urban Company Business Model

Founded in 2014, Urban Company is a full-stack online services marketplace connecting customers with trained professionals for home, beauty, and wellness services. Its full-stack model means the company manages the entire process, from onboarding and training to providing products and equipment for its professionals. Its home services comprise cleaning, pest control, appliance servicing, and home repair & maintenance, including electrical, plumbing, carpentry and painting. Its beauty and wellness services comprise skincare treatments and haircare services for women, grooming for men, and massage therapy for both. Under its brand ‘Native’, the company, through contract manufacturing, sells home solutions such as water purifiers and electronic door locks, launched in 2023 and 2024, respectively. 

As of June 2025, Urban Company operates in 51 cities across 4 countries, including 47 in India and 4 in the United Arab Emirates, Singapore, and the Kingdom of Saudi Arabia.

Urban Company Revenue Mix

Urban Company reported a revenue of Rs1,144 crore in FY25, with around ~87% coming from the Indian market and ~13% from international operations.

Source: RHP

The revenue breakdown is as follows:

• Sale of services (73%): Urban Company generates most of its revenue from commissions on services booked through its platform. The standard commission for all partners is 28% of the service value. However, this rate is slightly reduced for higher-performing partners; those completing more than 30 services in a month pay 27.5%, while the top 20% of partners by service volume pay 27.6% and so on. These rates apply across all home and beauty services.

 

Source: RHP

• Sale of products (27%): Around 27% of Urban Company's revenue comes from selling products like water purifiers, electric door locks, and other products required by service providers to deliver their services. The company purchases these products in bulk and sells them to partners at discounted prices, ensuring they have the necessary tools while creating an additional revenue stream.

Unit economics of Urban Company

 

 

Source: Finology research desk

Cost of goods sold (COGS), increased 64% from Rs 129 crore in FY24 from Rs 213 crore in FY25. However, as a percentage of total income, these costs have remained relatively stable, ranging around 14% to 17% over the past three years.

Employee benefit expenses rose just 2% from Rs 345 crore in FY24 to Rs 350 crore in FY25. But as a share of total income, these costs have declined sharply to 27% in FY25 from 52% in FY23, indicating that the company is generating significantly higher revenue without a proportional increase in staff costs.

Finance costs increased from Rs 9 crore in FY24 to Rs 11 crore in FY25, marking a 22% increase, which was mainly driven by an increase in interest on lease liabilities from Rs 86 crore in FY24 to Rs 100 crore in FY25.

Depreciation and amortisation expenses remained flat at around 3 to 4% over the past three years, given the asset-light model of the company’s operations.

Other expenses increased by 21% from Rs 500 crore in FY24 to Rs 604 crore in FY25. However, as a percentage of total income, it has been declining over the past three years from 71% in FY23 to 33% in FY25.

After accounting for these operating costs, the company booked a deferred tax credit of Rs 211 crore on account of past losses and posted its first net profit of Rs 240 crore in FY25, with a margin of 19%. However, excluding this one-time benefit, the profit would have been only Rs 29 crore, showing that profitability is still largely tax-driven rather than operational.

Porter’s Five Forces Analysis of Urban Company

 

Source: Finology research desk

1. High bargaining power of customers: Customers have high bargaining power in the industry, as they can easily switch to competing platforms or a local home service provider if prices or service quality do not meet expectations. Their price sensitivity and the availability of alternatives compel Urban Company to maintain competitive pricing and high service standards to ensure customer retention.
    
2. Moderate bargaining power of suppliers: Suppliers, who are service professionals, hold moderate bargaining power as they can join competing platforms or work directly with Urban Company’s customers after a single service, benefiting both the customer, saving the platform fee and the provider, keeping the full payment. The company, however, offers training and higher earnings, on average 30-40% more than independent professionals, while also allowing them the flexibility to work as freelancers, limiting the overall threat.
    
3. High competition in the industry: Urban Company faces intense competition from both organised players like Housejoy, Yes Madam, QuikrServices, etc, and numerous local unorganised service providers, as there is almost zero switching cost for customers. To mitigate this risk, Urban Company focuses highly on service quality and professional training to ensure that its service professionals meet higher standards than its competitors, but the overall rivalry remains high.
    
4. Moderate threat of substitutes: Substitutes for Urban Company include other home service providers (both online and offline), in-house staff and appliance Original Equipment Manufacturers offering direct servicing. While Urban Company offers convenience and quality assurance, the threat from substitutes still remains moderate.
    
5. Moderate threat of new entrants: The threat of new entrants in the online home services industry is moderate. While the asset-light model lowers entry barriers, matching Urban Company's scale and reputation is tough for startups, though well-funded players remain a potential threat.

Pros and Cons of Urban Company

Pros: 

• Market leadership and service portfolio: Urban Company is the dominant player in India’s online home services market, holding around 65% share. It operates in 51 cities and provides a wide range of services spanning home repairs, cleaning, beauty, and wellness, serving diverse customer needs.
• Expanding customer base: Urban Company’s annual transacting customers have grown steadily over the past three years, from 47 lakh in FY23 to 65 lakh in FY25. With 81.98% of users returning in FY25, this reflects strong customer retention, high satisfaction, and the platform’s ability to ensure quality service to its customers. With 90%+ of the home services industry still being unorganised, Urban Company is expected to be positioned strongly to grow its firm in this market.

Cons: 

• High onboarding costs: Urban Company’s model requires significant upfront spending on onboarding and training service professionals. The cost was Rs 158 crore in FY25, about 23% of India's revenue, and Rs 137.3 crore in FY24 (24%). Such consistently high expenses pressure margins and highlight the company’s heavy dependence on acquiring and retaining service professionals, exposing it to sustained pressure on profitability if the attrition rates rise.
• Recent profit driven by one-time adjustment: Urban Company reported its first profit of Rs 240 crore in FY25, which was largely driven by deferred tax credit of Rs 211 crore and other income of Rs 116 crore rather than its core operations. Without these one-time gains, the company would have incurred losses once again.

The Bottom Line

Urban Company has established itself as a leading player in India’s organised home and personal services market, backed by its wide reach, diverse service portfolio, and growing customer base. However, the company faces challenges from high onboarding and training costs for service professionals, as well as a lack of core operating profitability. Will it be able to sustain growth while turning its operations consistently profitable? Will it live up to its listing gain performance and gain glory over the long term? What are your thoughts?