'Sell Urban Company', Kotak says, even as stock falls 30% from listing highs

Shares of home services provider Urban Company Ltd. will be in focus on Thursday, November 27, after Kotak Institutional Equities initiated coverage on the stock.

Kotak has initiated coverage with a 'Sell' rating and a price target of ₹120, implying a downside of 13% from Wednesday's close.

The brokerage said in its note that Urban Company operates as a multi category home services platform present in India, the UAE, Singapore and Saudi Arabia.

Kotak expects Urban Company's India consumer services business to grow steadily at 17% a year, and its international business to grow much faster at 33% a year between FY25 and FY28.

It also expects the India consumer services segment to deliver strong profit growth of 38% a year (on an adjusted EBITDA basis) during this period, though the Insta Help business will still need investment.

Urban Company had received two coverage initiations from Morgan Stanley and Goldman Sachs on October 23, and both of these brokerage firms expected the shares to fall going forward.

Morgan Stanley has initiated coverage on Urban Company with an 'Underweight' rating and a price target of ₹117, while Goldman Sachs initiated coverage on the stock with a 'Neutral' rating and a price target of ₹140.

Urban Company's shares had nearly doubled in a few days after listing, making a post-listing high of ₹201 on September 22, in comparison to its issue price of ₹103 per share. As of Wednesday's closing, the stock was down 31% from that post-listing high.

Shares of Urban Company closed 2.07% higher on Wednesday at ₹138.27. The stock still remains around 34% higher than its issue price.