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ET Money Profile picture
@ETMONEY
Sep 9 โ€ข 12 tweets โ€ข 3 min read โ€ข Read on X
Urban Company is coming up with a โ‚น1,900 crore IPO.

It will be the first-of-its-kind listed business in India.

Is it worth investing in?

Letโ€™s find out. A๐Ÿงต
We will cover 5 key aspects in this analysis:

- Business Model of Urban Company
- Financials
- Valuations
- Key IPO details
- Strengths and challenges

Letโ€™s start.
๐Ÿ. ๐๐”๐’๐ˆ๐๐„๐’๐’ ๐Œ๐Ž๐ƒ๐„๐‹

Urban Company makes money in 3 ways:

๐€. ๐ˆ๐ง๐๐ข๐š๐ง ๐‚๐จ๐ง๐ฌ๐ฎ๐ฆ๐ž๐ซ ๐’๐ž๐ซ๐ฏ๐ข๐œ๐ž๐ฌ (๐Ÿ•๐Ÿ’% ๐ซ๐ž๐ฏ๐ž๐ง๐ฎ๐ž): Cleaning, pest control, electrician, plumbing, carpentry, painting, skincare, hair grooming, massage therapy, and more
๐. ๐๐š๐ญ๐ข๐ฏ๐ž (๐Ÿ๐Ÿ”% ๐ซ๐ž๐ฏ๐ž๐ง๐ฎ๐ž): Sells water purifiers and electronic doorlocks

๐‚. ๐ˆ๐ง๐ญ๐ž๐ซ๐ง๐š๐ญ๐ข๐จ๐ง๐š๐ฅ ๐๐ฎ๐ฌ๐ข๐ง๐ž๐ฌ๐ฌ (๐Ÿ๐ŸŽ% ๐ซ๐ž๐ฏ๐ž๐ง๐ฎ๐ž): Services in the UAE, Singapore, and the Kingdom of Saudi Arabia Image
๐Ÿ. ๐…๐ˆ๐๐€๐๐‚๐ˆ๐€๐‹๐’

The financials show a strong turnaround in the business.

In the last two years, revenue and profits have shown impressive growth.

Even margins saw an improvement from FY23.

Also, the company is debt-free and has positive cash flows in FY25. Image
To study company financials, you can visit the ๐„๐“ ๐Œ๐จ๐ง๐ž๐ฒ website or log in to the app.

Under the ๐ฌ๐ญ๐จ๐œ๐ค๐ฌ ๐ฌ๐ž๐œ๐ญ๐ข๐จ๐ง, you get a whole host of data ๐ข๐ง ๐จ๐ง๐ž ๐ฉ๐ฅ๐š๐œ๐ž.

You can look at financials, comparison with peers, technicals, key metrics, and a lot more.
๐Ÿ‘. ๐‡๐Ž๐– ๐„๐—๐๐„๐๐’๐ˆ๐•๐„ ๐ˆ๐’ ๐”๐‘๐๐€๐ ๐‚๐Ž๐Œ๐๐€๐๐˜ ๐•๐’ ๐๐„๐„๐‘๐’?

There are no direct listed competitors.

We have compared UC with major listed tech platforms using the Price-to-Sales Ratio.

Price to Sales = Market Cap รท Sales

The IPO appears to be overpriced. Image
๐Ÿ’. ๐Š๐„๐˜ ๐ˆ๐๐Ž ๐ƒ๐„๐“๐€๐ˆ๐‹๐’

The Company is raising โ‚น1,900 Cr via IPO.

Of this, only โ‚น472 Cr is fresh capital for the company.

The remaining โ‚น1,428 Cr is an Offer for Sale (OFS), which means existing shareholders are selling their shares.

Here are other key details. ๐Ÿ‘‡ Image
๐Ÿ“. ๐’๐“๐‘๐„๐๐†๐“๐‡๐’ ๐€๐๐ƒ ๐‚๐Ž๐๐‚๐„๐‘๐๐’

๐๐จ๐ฌ๐ข๐ญ๐ข๐ฏ๐ž๐ฌ

The company is growing fast and has ample headroom for growth.

It is debt-free and turned profitable in FY25.
๐๐ž๐ ๐š๐ญ๐ข๐ฏ๐ž๐ฌ

The competition from offline service providers and the unorganised space is immense, and the entry barriers in this segment are low.

The valuations appear to be expensive from the perspective of other tech-based platform stocks.
๐–๐ข๐ฅ๐ฅ ๐ฒ๐จ๐ฎ ๐ข๐ง๐ฏ๐ž๐ฌ๐ญ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ˆ๐๐Ž?

- Yes

- No
If you find this useful, show some love. โค๏ธ

Please like, share, and retweet the first tweet.

โ€ข โ€ข โ€ข

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More from @ETMONEY

ET Money Profile picture
Sep 11
Manish Gunwani has changed the game at Bandhan Mutual Fund.

Under him, equity funds have bounced back, and his small-cap fund is a star performer.

Here are SEVEN insights from our podcast that could change how you invest. ๐Ÿงต Image
Buy-and-hold doesnโ€™t work in small caps. They are too sensitive to policy and macroeconomic changes. Therefore, one must actively manage the allocation.
Peter Lynchโ€™s Magellan Fund had 25% - 30% returns in the US in the 1980s. Indian markets are in a similar trajectory. Small-cap funds can deliver similar returns over the next 10-15 years.
Read 9 tweets
ET Money Profile picture
Sep 10
๐’๐ก๐จ๐ฎ๐ฅ๐ ๐ฒ๐จ๐ฎ ๐ฉ๐ซ๐ž๐ฉ๐š๐ฒ ๐ฒ๐จ๐ฎ๐ซ ๐ฅ๐จ๐š๐ง ๐จ๐ซ ๐ข๐ง๐ฏ๐ž๐ฌ๐ญ ๐ข๐ง ๐š ๐ฆ๐ฎ๐ญ๐ฎ๐š๐ฅ ๐Ÿ๐ฎ๐ง๐?

Hereโ€™s some fresh perspective on this age-old question.

A ๐Ÿงต
An example will make the discussion easy.

Say you have a โ‚น50 lakh home loan.

Interest rate = 9%

EMI = โ‚น44,986

You have โ‚น1 lakh in your pocket and confusion in your head โ€“ should I prepay or invest?
๐Ž๐๐“๐ˆ๐Ž๐ ๐Ÿ: ๐˜๐Ž๐” ๐๐‘๐„๐๐€๐˜

This decreases your principal.

When your outstanding balance shrinks, two things can happen.

A. Your EMI reduces, or
B. Your tenure shortens, saving you interest payments

For now, letโ€™s focus on option B and understand how this works. ๐Ÿ‘‡
Read 17 tweets
ET Money Profile picture
Sep 7
What if you only invested in companies that give the best returns?

Can you beat the markets with such a โ€˜Winnersโ€™ Portfolioโ€™?

We did the maths.

โ‚น35 lakh invested over a decade wouldโ€™ve become โ‚น1.31 crore.

Letโ€™s break it down. A๐Ÿงต
Letโ€™s briefly discuss what we did.

A. We looked at 35 stocks with the highest returns starting FY15

B. Invested an equal amount in them

C. We sold them after a year and invested in a new set of stocks that had the best return

D. Repeated this exercise for a decade
We selected the 35 biggest winners of FY15 (Apr 1, 2014 - Mar 31, 2015).

Invested โ‚น10,000 in each of them on Apr 1, 2015.

Total investment = โ‚น3.5 lakh

A year later (on Mar 31, 2016), the returns were 11.1%.

How did the BSE 500 fare? It was down 7.8%. Image
Read 15 tweets
ET Money Profile picture
Sep 6
Can you select stocks based ONLY on the RETURNS?

To find the answer, we ran numbers.

We compiled a portfolio of stocks that yielded the highest returns each year, and invested in them.

Result?

These stocks easily outperformed the markets. A๐Ÿงต
Letโ€™s briefly discuss what we did.

A. We looked at 35 stocks with the highest returns starting FY15

B. Invested an equal amount in them

C. We sold them after a year and invested in a new set of stocks that had the best return

D. Repeated this exercise for a decade
We selected the 35 biggest winners of FY15 (Apr 1, 2014 - Mar 31, 2015).

Invested โ‚น10,000 in each of them on Apr 1, 2015.

Total investment = โ‚น3.5 lakh

A year later (on Mar 31, 2016), the returns were 11.1%.

How did the BSE 500 fare? It was down 7.8%. Image
Read 15 tweets
ET Money Profile picture
Sep 4
The government has announced a major GST cut.

Earlier this year, two other major reforms were rolled out.

A. Taxes were lowered

B. Three rate cuts, reducing interest rates by 100 bps.

What do these THREE big steps signal for the economy? A ๐Ÿงต Image
For years, private investment has been losing steam.

In FY24, the private sectorโ€™s share in total investment fell to 32.4%.

That was an 11-year low, according to the latest data from the Ministry of Statistics.

In short, companies have remained cautious about expanding.
The government's capital expenditure bridged the gap.

In FY24, combined investments by the Centre and the states accounted for more than 25% of total investment.

Indiaโ€™s growth engine has relied heavily on public spending.
Read 12 tweets
ET Money Profile picture
Sep 3
A rental income of over 11% without owning a property.

Thatโ€™s the return Small and Medium REITs (or SM REITs) aim to deliver.

And itโ€™s possible, based on the two recent public issues of SM REITs.

But does this new asset class also carry higher risk?

Letโ€™s find out.๐Ÿงต Image
Before discussing risk and returns, letโ€™s talk about two important things.

A. What are SM REITs
B. How are they different from traditional REITs
Think of traditional REITs as a listed large-cap stock that pays dividends.

What do you get?

- A mature diversified business spanning across geographies

- Scale & diversity provide business stability

- Cash flows can be analysed & forecasted

- Return expectation = moderate
Read 16 tweets

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