Meesho Stock Makes Strong Market Debut with 46% Premium

Meesho, the Indian e-commerce platform, launched its shares on the stock market with a remarkable debut on Wednesday, with initial trading priced at ₹161, reflecting a 46% premium over its initial public offering (IPO) price. The company's IPO raised ₹5,421.20 crore, achieving a substantial subscription rate of 79 times, positioning Meesho among the most noteworthy tech listings of the year.

At the National Stock Exchange (NSE), Meesho's shares were trading at ₹162, an increase of ₹51 from the issue price. Similarly, on the Bombay Stock Exchange (BSE), shares traded at ₹161, showing a 45% rise from the IPO price.

IPO Details

The IPO opened to investors on December 3 and closed on December 5, offering a total of 27.79 crore shares. This included a fresh issue of approximately 38.29 crore shares valued at ₹4,250 crore, alongside an offer for sale of 10.55 crore shares. By the end of the subscription period, the exchanges had recorded applications for an impressive 2,197 crore shares. This demand was primarily driven by institutional investors, with the Qualified Institutional Buyers (QIB) category seeing the most interest, subscribing at a rate of 120.18 times for just over 15 crore shares. Non-institutional investors subscribed 38.16 times, while retail participation reached 19.08 times.

Share allotment is scheduled to be completed on December 8, with shares expected to be credited to investors' demat accounts by December 9. Ahead of the listing, grey-market quotes indicated positive sentiment, with a premium of ₹42.5 suggesting a potential listing price around ₹153.5, which would represent a 38.29% increase from the upper price band of ₹111.

User Growth and Outlook

Meesho has reported a 46% increase in annual transacting users from fiscal year 2023 (FY23) to fiscal year 2025 (FY25), with a total of 19.9 crore users placing orders in FY25. Notably, 17.4 crore of these users originated from cities outside the top eight metropolitan areas, indicating strong growth potential in tier-2 and tier-3 cities.

Prasenjit Paul, an Equity Research Analyst at Paul Asset and Fund Manager of the 129 Wealth Fund, expressed optimism regarding the platform's prospects, citing the ongoing demand in smaller cities. However, he urged caution, noting that profitability in these markets is still in its infancy, necessitating careful observation of both sustainability and the relatively elevated valuations.

InCred has also issued a 'Subscribe' rating for short-term gains based on attractive valuations of 5.3 times market capitalisation to sales. Nonetheless, it warned that achieving sustained EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) breakeven remains a considerable challenge due to ongoing supply chain optimisation issues, scaling monetisation, and maintaining competitive pricing.

Financial Performance

For FY25, Meesho reported revenues of ₹9,390 crore, marking a 23.3% increase compared to the previous fiscal year, while continuing to narrow its EBITDA losses. The company recorded an adjusted loss of ₹2,595 crore for FY25. Analysts highlight that Meesho has demonstrated strong operating leverage and has achieved positive free cash flow for two consecutive years, with a last twelve months (LTM) free cash flow of ₹581 crore as of the first half of FY26.

Operational metrics indicate rapid growth, with order volumes increasing from 102 crore in FY23 to 183 crore in FY25, bolstered by the company's 'everyday low price' strategy. Additionally, contribution margins improved by 200 basis points to 4.9% over two years. The logistics division, Valmo, along with a growing share of prepaid orders and a zero-commission seller model, has enabled Meesho to support 15.4 crore daily active product listings as of the first half of FY26.

However, risks remain. The company's reliance on cash-on-delivery orders raises concerns regarding fraud and cancellations, and it faces competitive pressures across various aspects of fulfilment, discovery, and affordability.

(Disclaimer: The views and recommendations regarding the stock market, asset classes, or personal finance management expressed by experts are their own and do not necessarily reflect the views of the Times of India.)