Wary of losses from startup IPOs? Urban Company offers what Swiggy, Zomato or Paytm couldn't

Tech IPOs are keenly watched in the primary market arena as investors bet on the potential growth story of these businesses in a rapidly evolving digital landscape. However, several marquee IPOs including from Swiggy, Zomato, Paytm and Policybazaar, have disappointed investors in the immediate aftermath of listing. Most of these companies were loss-making at the time of going public, which made it impossible to justify the lofty valuations they were seeking.

However, Urban Company, which is planning an IPO later this week, is coming to the Street with a different story - that of better financial strength and profits under its belt. Whether this will lure investors will depend on several other factors, but one thing is for sure. There is no additional pressure on the company to script a turnaround in its financials in a jiffy and it can walk at its own pace on the growth path.

For the quarter preceding the filing of IPO, Swiggy had reported a loss of around Rs 611 crore, Paytm a loss of Rs 382 crore and PB Fintech a loss of Rs 110 crore. Zomato had clocked a loss of Rs 816 crore in the year running up to the IPO.


Meanwhile, Urban Company has posted solid numbers in the past fiscal year. The company saw a 38% increase in its operating revenue for 2024-25 to Rs 1,144 crore, while it reported a net profit of Rs 240 crore. The turnaround came on the back of a Rs 211 crore deferred tax credit. However, even on a pre-tax basis, the company reported a profit of Rs 28 crore.

In the quarter ended June 2025, the home services marketplace posted a small but significant profit of Rs 6.9 crore. In the past, only Nykaa, among the starry tech names that entered the public markets, had profits from its operations while asking funds for its IPO.

Are strong financials enough to lure investors?

In the case of Urban Company, analysts say the valuations are still very expensive despite having sound financials. The company is seeking a valuation of around Rs 15,000 crore at an upper price band of Rs 103.

"While the company has a decent business model and customer acceptance, this valuation is absolutely out of the park as the earliest it can make a profit of Rs 150 crore is 2-3 years from now. This is 100x 2 to 3 years forward earnings," said Sandip Sabharwal, a veteran fund manager.

Tech companies are prone to price their IPOs on the expensive side, leaving no value for investors in the short run as they believe their earnings potential will multiply in the years to come. However, market veterans point this as a disturbing trend and say that these companies have to prove their financial mettle before asking for exorbitant valuations.

"People are getting sucked into newer and newer companies at higher and higher valuations. Best of luck to them," Sandip added.

Urban Company connects consumers with trained service professionals across categories like cleaning, beauty, repairs, pest control, and wellness. It also sells products under the ‘Native’ brand, including water purifiers and smart locks. Urban Company operates across 51 cities in India and overseas markets including the UAE and Singapore.

India’s home services market is underpenetrated, but fast-growing, pegged at $59 billion in 2024 and projected to expand to $97 billion by 2029.

The IPO will be open for subscription for investors on September 10 and it will close on September 12. The public offering will include a fresh issue worth up to Rs 472 crore and an offer for sale (OFS) of up to Rs 1428 crore.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)