BENGALURU: Urban Company Ltd plans to launch an air-conditioner-cum-air purifier ahead of Diwali this year, according to two people with direct knowledge of the matter, as the quick-services platform expands beyond its home and beauty services business and deepens its presence in its consumer durables vertical.
Urban Company entered the consumer durables segment in October 2023 with the launch of its Native brand, starting with water purifiers. Since then, the company has added electronic door locks and is now looking to scale up with air-conditioner-cum air purifiers.
“Urban Company can only make so much profit from its services business because that depends heavily on manpower and day-to-day operations. By selling its own appliances, the company can build a business that scales faster and earns better margins, which is why it is expanding further into consumer durables under Native,” one of the two people said.
India’s air-conditioner market is expanding rapidly but remains underpenetrated. Although average daily daytime highs in the plains of north and central India can range from 40°C to 45°C in the summer months of April to June, only about 7.8% of the households in the country own an AC, compared with higher adoption in markets such as Indonesia and China, pointing to strong growth potential.
Industry volumes grew 20-25% to a record 12.5 million-13 million room ACs in FY25, according to Icra, as improving electricity access, easier financing and rising incomes pushed demand beyond large cities into smaller towns. It said the long-term demand outlook for the room AC industry remains healthy with a forecasted compounded annual growth rate of 10-15% in volumes from FY26 to FY30.
The market is dominated by companies such as Voltas, Daikin, Blue Star and LG Electronics. According to industry estimates, Voltas holds about 21% market share, Daikin about 17% and Blue Star about 14%.
Creating demand
One of the people said the company is developing a two-in-one product because it is a relatively late entrant in the category and needs a clear point of differentiation to create demand. The device will have two operating modes.
“When the person wants to have an AC, they can have an AC, and when they want to have an air purifier, they can have an air purifier,” the people said. The air purifier market is driven by air pollution levels in major cities such as Delhi, Mumbai and Kolkata crossing hazardous limits due to vehicular exhaust and industrial pollution. In the northern states, crop burning during the winter adds to the air pollution.
The device will be assembled locally, one of the people said. Mint could not independently verify the expected launch price, though one of the people said it would be positioned at a premium to existing products because of its technology-led features.
Urban Company, in its Q3FY26 earnings call, said it has tied up with Amber Enterprises as a second contract manufacturer for its Native business to diversify its supply chain and reduce backend risk as the business scales. Amber is a contract manufacturer of ACs, electronics and railway subsystems.
Urban Company’s planned entry into the air-conditioner market is likely to be an uphill task, given the segment’s technical complexity and entrenched competition, said Arvind Singhal, chairman and managing director of The Knowledge Company, a management consulting firm. While the category continues to benefit from low penetration and long-term growth potential, it is dominated by Daikin, Mitsubishi, LG and Samsung.
“I don’t really see a clear right to win for a new entrant,” he said.
Additionally, ACs are set to become more expensive this year even after GST cuts in September because of new energy-efficiency norms and rising copper and silver prices.
Input constraints
Singhal said the business is heavily dependent on globally sourced components such as compressors, while inputs like copper present structural constraints, limiting room for differentiation. He said profitability in the segment remains modest and that a large part of sales is still driven by brick-and-mortar retail, where consumers compare brands, receive assisted selling and access financing.
According to Singhal, entering the market ahead of the peak summer season could still be a pragmatic move, allowing companies to test and refine their product and supply chain before demand peaks, though any innovation, such as combining air purification with cooling, will ultimately need to deliver tangible value to stand out.
Urban Company did not respond to Mint’s emailed queries.
Native has emerged as one of Urban Company’s fastest-growing businesses.
“In our Native business, we continue to see strong year-on-year demand with NTV (net transaction value) up 93% year-on-year, alongside meaningful margin improvement compared to the same time last year,” said Abhiraj Singh Bhal, co-founder and CEO of the company.
In its Q3FY26 shareholder letter, the company said Native’s net transaction value – the total value of orders placed on a platform after adjusting for cancellations, returns, discounts and taxes – rose 93% year-on-year to ₹79 crore in the December quarter, while revenue more than doubled to ₹62 crore, led by strong demand for water purifiers and electronic door locks.
The company’s consolidated business NTV grew 36% YoY to ₹1,081 crore, while revenue increased 42% to ₹383 crore.
“Native is still an early-stage business, but it has shown margin improvement and absolute losses have been coming down,” Bhal said.
Path to profitability
Losses in the Native business have narrowed sharply, with the adjusted Ebitda margin improving to -5% from -28% of NTV a year earlier due to higher sales and tighter cost control. The Ebitda margin measures a company's operational profitability by calculating earnings before interest, taxes, depreciation and amortization as a percentage of total revenue.
“The immediate near-term focus is not to break even. It is to continue to scale well and bring it to a certain scale,” Bhal said, adding that profitability is expected to improve as the business grows.
He said future growth in Native will come from launching more products within existing categories, while focusing on profitable growth instead of expansion at any cost.
