Mindpsyche, that's a particularly curly question. The short and simple answer is, Yes - it is Urdu.
The longer answer is that, back in those days, and up in Kashmir, there was no formalised 'Urdu', with proper sets of grammatical rules and spelling etc. Individuals would throw in odd words from local dialects, Persian, Afghan or anything else that came to mind. I only read Urdu (or Indo-Persian) with great difficulty, and I have a couple of dozen similar covers to work through - when I finally get around to it. You can see this cover is dated 1300 AH, equivalent to about 1882 CE, but you find covers written in Indo-Persian, but dated in Hindu VS years and even CE years.
A hundred years ago, throughout most of North India, a knowledge of Indo-Persian, or straight Persian, was the mark of an educated gentleman, rather as a knowledge of Latin and Greek was expected of the equivalent in Western Europe. You find early covers from Jaipur, for example, addressed in Indo-Persian:

and Jaipur was certainly an overwhelmingly Hindu state, with Hindu rulers. (But even so, if you aspired to a job in the Jaipur State public service in those days, you had to have serviceable Persian.) Neighbouring Alwar State was the same:

