Urban Company Ltd
Investment Thesis
Over a 3-5 year horizon, Urban Company Ltd will achieve sustained profitable growth and expand market leadership in India's organized home services sector, driven by its strong network effects, operational efficiency, and brand trust, successfully navigating evolving regulatory landscapes.
Assumptions
Revenue will grow at a Compound Annual Growth Rate (CAGR) of 20-25% over the next 3-5 years, driven by deepening service vertical penetration and geographic expansion within India.
Average service ticket prices will increase by 5-7% annually, supported by brand value and operational enhancements, while overall service bookings grow by 15-20% annually.
Gross margins will expand by 300-500 basis points over the next 3-5 years due to improved operational leverage and optimized partner acquisition costs, contributing to consolidated Adjusted EBITDA margins reaching 10-15%.
The company will maintain a net cash position, with Debt/EBITDA remaining at or below 0.5x throughout the forecast period, funded by strong internal cash generation and existing cash reserves.
No new significant gig worker regulations are enacted that materially increase operational costs or force a fundamental shift away from the current platform model, thus preserving the core business viability.
Capital expenditures will be managed efficiently, remaining between 8-10% of revenue annually, primarily for technology and infrastructure development, while the India business continues to exhibit negative working capital dynamics.