Shares of Urban Company settled at ₹168.12 per share on Wednesday, down 0.69% after Bank of America (BofA) downgraded the stock to 'Underperform' from 'Neutral'. The stock had gained around 16% in the previous three sessions before the downgrade, snapping a three-session rally. According to NDTV Profit reports, BofA downgraded the stock after it gained around 30% since the company announced its June quarter earnings. The brokerage cited the stock's expensive valuation, company losses, a distorted risk-reward ratio and growing competition in the instant-help services segment as key concerns.
According to the latest court ruling, Urban Company has successfully secured a significant interim victory in its legal battle against Kent RO Systems Limited. The Delhi High Court ruled in favor of Urban Company on August 12, 2026, following a lawsuit filed on August 11, 2026, over misleading advertisements about the company's NATIVE water purifiers. During the hearing before Justice A J Bhambhani, Kent RO conceded and confirmed to the Delhi High Court that it would retract the contentious advertisements and refrain from broadcasting any new advertisements making similar claims about Urban Company's water purifiers. The court directed Kent RO to remove the disputed promotional content within 15 days from August 12, 2026. The court's order recorded Kent's undertaking but did not determine whether Urban Company's two-year filter or no-servicing claims were correct, or decide the underlying allegations.
BofA retained its target price at ₹155, implying a downside of around 8% from the current price of ₹168.12. The brokerage cited the stock's expensive valuation, company losses, a distorted risk-reward ratio and growing competition in the instant-help services segment as key concerns. As reported by NDTV Profit, BofA expects higher competition and investments in the Instant Help services to drag down overall EPS despite improving momentum at the core business. The brokerage noted that competition is expected to rise as Urban Company's peers Snabbit and Pronto have raised capital. BofA said InstaHelp could support a potential re-rating of the company, but losses in the segment are expected to remain high in the near term.
Urban Company's Native segment reported strong financial performance with revenue of ₹95.28 crore in the first quarter, up 60% from the previous year's ₹59.55 crore. The segment's EBITDA loss narrowed to ₹7.75 crore from ₹10.87 crore in the year-ago period, indicating improved operational efficiency. However, BofA's latest analysis shows that InstaHelp's EBITDA loss increased significantly from ₹100 million in Q1 FY26 to ₹1.3 billion in Q1 FY27. Despite these challenges, brokerage firm UBS has initiated coverage on Urban Company with a "buy" rating and target price of ₹180 per share, representing an upside of 13.5% from its previous close. UBS noted that Urban Company is "going through its Blinkit moment," referencing the company's rapid growth trajectory.
BofA has cut its earnings estimates for Urban Company, now expecting FY28 EPS at a loss of ₹0.73, against an earlier estimate of ₹0.59. The FY29 EPS estimate was reduced to ₹1.41 from ₹2.27 earlier. The brokerage expects India's consumer-services market to grow at a 19.8% compound annual growth rate during FY26-29, excluding InstaHelp. Despite the challenges, Emkay has also initiated coverage on the stock with a 'Buy' rating and target price of ₹190, expecting InstaHelp to offer a large total addressable market and help improve frequency, customer stickiness and cross-selling. The latest downgrade comes after Urban Company had rallied following positive analyst coverage, with UBS and Emkay both initiating 'Buy' ratings on the stock.
