Urban Company shares surged nearly 18% following the release of strong Q1 FY27 results, with investors responding positively to the company's improved financial performance and bullish brokerage upgrades. Morgan Stanley upgraded the stock from 'Underweight' to 'Overweight' and raised its target price from ₹128 to ₹165 per share, while Motilal Oswal maintained its Neutral rating with a target price of ₹140. The combination of improving financial metrics and optimistic brokerage outlook drove heavy buying during the trading session, with the stock reaching a three-month high.
The company delivered exceptional Q1 FY27 results with revenue from operations reaching ₹528.34 crore, representing 43.85% year-on-year growth and 24% sequential growth. Net loss narrowed significantly to ₹92.12 crore from ₹161.16 crore in the previous quarter, marking a 43% sequential reduction in losses. The Net Transaction Value (NTV) stood at ₹1,465 crore, growing 42% YoY, which was above the brokerage's estimate of 36% YoY growth. The India consumer services NTV reached ₹1.1 billion, growing 29.4% YoY versus the estimated 22% YoY growth, while InstaHelp NTV was ₹530 million compared to the estimated ₹600 million.
Urban Company's core marketplace continued to perform strongly during the quarter, with the India consumer services business, excluding InstaHelp, reporting 31% year-on-year revenue growth to ₹356 crore, reflecting healthy demand across beauty, home cleaning, repairs and other professional services. The company achieved an important milestone by adding approximately 1.2 million new users, marking the first time it crossed one million customer additions in a single quarter. The international business delivered robust performance with revenue increasing 82% to ₹65 crore, while the Native products business grew 60% to ₹95 crore, indicating improving diversification beyond marketplace services.
Following the strong quarterly performance, investors are closely monitoring Urban Company's progress toward its long-term targets. The company has guided that it aims to achieve consolidated adjusted EBITDA breakeven by Q3 FY28 while targeting around ₹1,000 crore in adjusted EBITDA by FY31. Morgan Stanley's upgrade reflects stronger growth in the core business, improving profitability trends, and better long-term growth prospects, while Motilal Oswal's Neutral stance reflects continued investments in InstaHelp and limited visibility on the pace of profitability till FY31. The brokerage notes that the core business is largely reflected in current valuations, with continued investments in InstaHelp keeping the risk-reward balanced.
