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Motilal Oswal does not see significant upside on Urban Company as multiple risks lie aheadUrban Company had listed on the stock exchanges at a 60% premium in September 2025 and is now down 43.8% from its post-listing high of ₹201.18 apiece.By Shloka Badkar  March 24, 2026, 12:14:57 PM IST (Published)3 Min ReadShares of Urban Company Ltd. gained over 4% on Tuesday, March 24, after brokerage firm Motilal Oswal Financial Services initiated coverage on the stock, but said that the risk-reward is "fairly balanced" currently.

Motilal Oswal has initiated coverage with a "neutral" rating on Urban Company with a price target of ₹125 per share, an upside potential of 14% from its previous close. The price target is well below Urban Company's post-listing high of ₹201 apiece.

Motilal Oswal said the broader home services market which was worth $60 billion in financial year 2025, is poised to benefit from increasing urbanization, busier lifestyles and improving income levels.

Technology-led platforms are addressing the persistent offline inefficiencies such as inconsistent service quality, opaque pricing, unreliable availability and weak post-service support and they are standardising service, transparent pricing and structured grievance redressal, the brokerage said.

Motilal Oswal has forecast the net transaction value (NTV) of India's consumer services industry to post a 17% compounded annual growth rate (CAGR) estimated over financial year 2025-2037, aided by rising urbanisation, higher category adoption per cohort and a gradual increase in online penetration.

Motilal Oswal has estimated Urban Company's EBITDA margin to improve by 840 basis points over FY25-37, driven by operating leverage, better micro-market densification and a higher share of retained users.

The brokerage has valued Urban Company on an sum-of-the-parts (SoTP) basis. For the India consumer business, it has estimated a 50x enterprise value (EV) / EBITDA multiple, given the company's strong market share, translating into a per-share value contribution of ₹85.

Motilal Oswal has valued Native (water purifiers and electronic door locks) at three times its FY28 EV/sales due to its higher growth and differentiated value proposition, resulting in a per-share value of ₹11.

The rising revenue contribution positions this segment as a higher-margin growth lever beyond core services, Motilal Oswal said. The international business has been valued at two times its FY28 EV / sales, with a per share value of ₹5.

InstaHelp is at an early stage of its business and remains an optionality, and hence, Motilal Oswal has valued it at 1.5 times its FY28 EV/NTV, with per-share value of ₹10.

Continued investments in onboarding, training and supply expansion are likely to sustain cash burn, making the adoption trajectory and unit economics key monitorables, it added.

"Despite strong structural tailwinds and category leadership, we see a balanced risk-reward at the current valuations given gradual habit formation, penetration, potential competitive risks and investment-led margin trade-offs," it the brokerage said in its note.

Shares of Urban Company are now trading 2.9% higher on Tuesday at ₹113.4. The stock has nearly halved from its post-listing high and is looking to sustain above its issue price of ₹103 per share, after briefly slipping below that.

Urban Company had listed on the stock exchanges at a 60% premium in September 2025 and is now down 43.8% from its post-listing high of ₹201.18 apiece.

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