Shares of home services platform Urban Company slumped nearly 10% on Monday, after the company posted bigger-than-expected losses in Q4, deepening analysts’ concerns around the heavy investments in its loss-making quick services business, Insta Help.

The company said it will continue to invest in Insta Help that provides professionals for daily cleaning services in 15 minutes. As a result, it expects losses to stay elevated for the coming quarters, with consolidated Adjusted EBITDA breakeven only by Q3 FY28. Net loss for Q4 widened to Rs 161 crore from Rs 2.8 crore in the year-ago period, much higher than analysts’ estimate of Rs 80 crore.

Analysts with Motilal Oswal noted that continued investments in Insta Help and uncertainly around the total addressable market of such services were the key overhang for the stock. It maintains a Neutral rating with a target price of Rs 135. The stock closed at Rs 126.05 on Monday, 22% higher than its IPO price of Rs 103.

“Continued investments and TAM uncertainty in InstaHelp, execution risks around penetration, and risk around habit formation keep the risk-reward balanced, in our view,” the brokerage report said.

Decoding Q4 losses

Insta Help, which is in a fierce competition with rival platforms Snabbit and Pronto, lost Rs 447 per order in Q4, higher than Rs 381 it lost on every order in Q3. The largest contributor to losses are the subsidies the company gives to both the user, in the form of discounts, and the service partner as incentives.

However, the investments resulted in 2.7 million orders worth Rs 40 crore in Q4, up from 1.6 million orders worth Rs 27.6 crore in the December quarter. But as more new users tried the service, average order value declined to Rs 150 from Rs 172. New trials typically have lower AOV realizations. Moreover, scaling up value packs, which have a lower price per service versus standalone orders, also pressured AOV.

“While repeat rates and service quality trends appear encouraging, visibility on steady-state margins and TAM size remains limited, in our view,” the report said.

Despite attracting new users, the competition in the quick services space continues to intensify, keeping marketing costs high for Insta Help. Both Snabbit and Pronto are well-funded players, backed by institutional investors. Lightspeed-backed Snabbit raised a $56 million round last month, while Pronto, which slashed prices for its services to as low as Rs 50 for 30 mins, raised $20 million last week.