Urban Company has disclosed receiving a significant GST demand order from tax authorities, marking a major regulatory development for the home services platform. The company received the order from CGST authorities for a total amount of ₹56.43 crores, including a penalty.

GST Demand Details

The Central Goods and Services Tax (CGST) authorities have passed an order confirming substantial financial demands against the company:

Nature of Tax Dispute

The demand order stems from disagreements over GST discharge rates on payments made to service professionals. Urban Company has been discharging GST at 5% rate under Section 9(5) of the CGST Act 2017 on payments made to professionals providing:

• Plumbing services
• Carpentry services
• Electrician services
• Cleaning services

The company covered these services under housekeeping services classification. However, the tax authorities have taken a different view regarding the scope of housekeeping services under Section 9(5), extending it to include:

• Appliance repair services
• Appliance servicing
• Painting services

The GST demand has been raised on payouts to service professionals rendering these additional services.

Company's Response Strategy

Urban Company has outlined its approach to contest the order:

The company plans to file an appeal against the GST demand order, maintaining confidence in its position. Urban Company states that it believes it has a strong case on merits, supported by opinions from external legal and tax advisors.

Regulatory Compliance

This disclosure has been made pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The information follows SEBI Master Circular guidelines and will be hosted on the company's investor relations website at https://investorrelations.urbancompany.com/ .

The company has assured that the aforementioned order will not impact its financial, operational, or other activities, indicating business continuity despite the regulatory challenge.

Urban Company , the home services platform, has received an 'Underweight' rating from global investment bank Morgan Stanley, with analysts setting a price target of ₹119 per share. This rating indicates the brokerage's cautious outlook on the company's near-term performance prospects.

Analyst Rating Details

Morgan Stanley's research team has maintained their 'Underweight' recommendation on Urban Company shares. The rating suggests that analysts believe the stock may underperform relative to the broader market or sector indices.

Investment Implications

An 'Underweight' rating typically indicates that institutional investors should hold a smaller position in the stock compared to its representation in benchmark indices. This conservative stance from Morgan Stanley reflects their assessment of Urban Company's current valuation and market dynamics in the home services sector.

The ₹119 price target provides investors with Morgan Stanley's view on the stock's fair value based on their fundamental analysis and valuation models. This target serves as a reference point for investors evaluating their investment decisions in the home services platform.

Market Context

Urban Company operates in the competitive home services aggregator space, connecting customers with service professionals across various categories. The company's business model relies on technology-driven marketplace dynamics and service quality to maintain its market position.

Morgan Stanley's rating reflects the investment bank's analysis of various factors including the company's financial performance, competitive positioning, and growth trajectory in the evolving digital services landscape.