Urban Company Shares Plunge 6% to New Low After Lock-In Period Ends

Urban Company's stock experienced a significant drop on December 15, falling nearly 6% as the mandatory three-month lock-in period for shareholders ended. This decline pushed the stock to a new low of Rs 121.40, a level not seen since its initial public offering (IPO) in September.

Nuvama Alternative & Quantitative Research estimated that approximately 4.15 crore shares, representing 3% of the company's stake, became available for trading as the lock-in expired. Based on the previous day's closing price of Rs 128.84, the value of these shares is roughly Rs 535 crore.

It's important to note that the expiration of the lock-in doesn't automatically mean all these shares will be sold immediately. It simply allows shareholders to trade them if they choose to do so.

**Urban Company's Stock Performance Since IPO**

Urban Company had a strong market debut on September 17, with shares listing at Rs 162.25 on the NSE, a premium of over 57% compared to the IPO price. The stock continued to climb, closing its first day of trading 64% above the IPO price.

In the sessions following its debut, the app-based beauty and home services platform continued to show gains, rising about 24% in the three sessions after the IPO to reach a peak of Rs 201.18 on September 22. That said, the reality is a bit more complicated. the stock's performance has since declined. Currently, it is trading more than 25% below its listing price, although it remains about 18% above its IPO price of Rs 103.

**Analyst Ratings**

Morgan Stanley initiated coverage of Urban Company in October with an 'Underweight' rating and a price target of Rs 117, suggesting a potential downside of over 9% from the previous closing price. While acknowledging the company's large addressable market and strong competitive advantages, Morgan Stanley's 'Underweight' rating reflects the view that the company's growth is already factored into the stock's price. They project a healthy 18-22% compound annual growth rate (CAGR) for core India consumer services, but also noted that high churn and supply constraints could moderate growth.

Goldman Sachs, on the other hand, started covering Urban Company with a 'Neutral' rating and a price target of Rs 140, indicating a potential upside of about 9% from the previous closing price. Goldman Sachs views the company's business model as robust, supported by a strong track record. They forecast a 24% revenue CAGR over FY25-30 and a 35% EBITDA CAGR for India services (excluding InstaHelp). Despite these positive factors, Goldman Sachs believes that the company's strengths are already reflected in its premium valuation, noting that the stock trades at a premium compared to its internet peers, although broadly in line on a growth-adjusted basis.

*Disclaimer: Investment views expressed are those of the analysts and do not represent the views of the website or its management. Consult with a qualified expert before making investment decisions.*