Meesho
IPO Size: Rs. 5,421 cr
- Fresh Issue of Rs. 4,250 cr for (i) Rs. 1,390 cr for cloud infra (ii) Rs. 1,020 cr for marketing and branding (iii) Rs. 480 cr for ML and AI investment (iv) balance for unidentified acquisitions and general corporate purposes
- Offer for Sale (OFS) of Rs. 1,171 cr - 70% OFS by the 7 investors like Elevation, Peak XV, Y Combinator (30% combined stake to drop to 27% post IPO) and 30% of OFS by the 2 promoters (19% combined holding to drop to 17%)
Price band: Rs. 105-111 per share
M cap: Rs. 50,096 cr, implying 11% dilution
- Only 10% retail, as company is loss making
IPO Date: Wed 3rd Dec to Fri 5th Dec 2025, Listing Wed 10th Dec 2025
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
E-commerce Platform for ‘Bharat’
Meesho Limited is a 10 year old Bengaluru headquartered ‘value-focused’ online marketplace, connecting 1 in every 4 Indian buyer (23 cr), with 7 lakh sellers on its app. 89% of Meesho’s buyers are from tier 2 and beyond towns of India. Company clocks the highest e-commerce shipment volumes in India, excluding quick-commerce, with 30% market share in FY 2025. 2/3rd of Meesho’s orders are fulfilled through proprietary logistics tech platform ‘Valmo’ (1 lakh delivery agents) and balance through end-to-end logistics partners.
What we like about Meesho:
- Challenging Deep-pocketing Competition: Meesho has become India’s largest e-commerce platform, in terms of number of transacting customers (23.4 cr) and number of orders (450 cr H1FY26 annualised, which is approximately 2x number of orders of Flipkart and roughly 4x of Amazon India, as per industry estimates.
- Power of Platform – Meesho’s H1FY26 annualised Net Merchandise Value (NMV) is close to Rs. 40,000 cr. This has been achieved with just Rs. 6,500 cr capital (raised Rs. 9,900 cr till date, less Rs. 3,500 cr cash on books). Thus, capital efficiency of 6x+ implies visible power of platform and is much higher than Nykaa’s ~4x, which was considered industry-leading.
- Hyper Growth – Number of orders of 183 cr in FY25, has already crossed 227 cr in H1FY26. Revenue (which is 30% take rate on NMV for logistics and advertising billed to seller, no commission) of Rs. 5,700 cr in FY23 has almost touched Rs. 5,600 cr in first half of FY26.
What do we not like about Meesho?
- Business is Loss Marking: Deducting direct cost incurred to deliver order to customer, company’s contribution margin or gross profit is just 4%. EBITDA is negative at 12% or Rs. 690 cr EBITDA loss (excluding other income) in H1FY26. Thus, business is still burning cash.
However, platform businesses, although asset light, due to no inventory, need time and capital to build. Amazon took 30 years to reach operating margin of 5%, ex-AWS business, that too on revenue of USD 500 billion. Even Amazon India with Rs. 30,000 cr revenue is loss making, as of FY25.
- Eye-popping Remuneration to Independent Directors – In FY25, independent directors Mr. Rohit Bhagat and Mr. Surojit Chatterjee were paid remuneration of Rs 2.06 cr and Rs. 1.8 cr respectively. We are not doubting the credentials but have never seen such kind of payments for non-executive roles. Even Jubilant Group’s Mr. Hari Shanker Bhartia’s Rs. 83 lakh remuneration for independent director is unusual. And loss making business makes this amount even more surprising.
Finally, does IPO Pricing adequately account for these factors?
Yes, we think so!
At m cap of Rs. 50,100 cr, Meesho IPO is priced at 1 time its NMV, while Nykaa is over 4x and Eternal 6x. Nykaa’s gross merchandise value (not NMV) is at Rs. 20,000 cr with m cap of Rs. 74,000 cr, implying m cap to GMV multiple of 3.7x. For comparison, Meesho’s GMV is at Rs. 66,000 cr.
Eternal’s net order value is at ~Rs. 47,000 cr, with m cap of Rs. 2.9 lakh cr, translating into 6x multiple. Even offline retailers like Avenue, Trent, Vishal Mega Mart are ruling at 4.5-8x, wherein their revenue is same as NMV for a marketplace. Thus, Meesho’s lower multiple adequately discounts its loss making operations.
Even Flipkart’s reported private market value is USD 35-40 bn, on FY25 revenue of Rs. 20,500 cr and net loss of Rs. 1,500 cr (7% net loss margin), implies 15x revenue multiple. Meesho’s revenue multiple is at 5x on FY25 revenue of Rs. 9,400 cr and -15% net loss. Swiggy, with negative 18% EBITDA on Rs. 19,000 cr topline, is ruling at a revenue multiple of 5x.
4th Dec 2025 at 12:06 pm
4th Dec 2025 at 10:51 am
3rd Dec 2025 at 09:48 pm