Meesho Shares Surge 46% on Listing Day After Robust IPO Response

On Wednesday, Meesho shares listed 46.39% higher on the NSE, with the Meesho listing price settling at ?162.50. The price band was in the range of Rs 105 to Rs 111. The book-built issue raised Rs 5,421.20 crores through a fresh issue of Rs 4,250 crores and an offer for sale of Rs 1,171.20 crores. The proceeds from the fresh issue would be used to fund cloud infrastructure (Rs 1,390 crores through subsidiary Meesho Technologies), AI/ML salaries (Rs 480 crores), marketing (Rs 1,020 crores), acquisitions (Rs 1,197.83 crores), and corporate purposes.

Company Overview

Meesho, founded in 2015 by Vidit Aatrey and Sanjeev Kumar Barnwal in Bengaluru, operates a technology-driven e-commerce platform connecting consumers, sellers, logistics partners, and content creators. The company democratizes internet commerce, targeting underserved markets with affordable products across fashion, home & kitchen, beauty, and baby care, boasting 153.72 million daily active listings and 234.20 million unique annual transacting users as of September 2025. Its asset-light model includes Valmo for logistics across around 19,300 pincodes.

Financials

Meesho demonstrates robust revenue growth from Rs 5,735 crores in FY23 to Rs 9,390 crores in FY25, achieving a CAGR of around 28% through marketplace expansion and seller service monetisation. Losses widened to Rs 3,942 crores in FY25 from Rs 328 crores in FY24, primarily due to one-time ESOP expenses and tax charges from corporate reorganization, yet core unit economics improved with contribution margin rising to 4.95% of NMV. Positive Last Twelve Months free cash flow of Rs 591 crores in FY25 highlights effective working capital management.

Strategies

Meesho allocates IPO funds to AI/ML via Meesho AI Labs for better personalisation, fraud prevention, and efficiency. It lowers seller costs through tech-driven optimizations and Valmo enhancements to maintain competitive pricing in low-AOV categories. Growth targets more annual transacting users and order frequency by expanding unbranded/regional SKUs and content commerce, while boosting monetization via seller ads, analytics, expedited services, and potential financial platforms.

Strengths

Meesho leverages interconnected flywheels in commerce, logistics via Valmo, and content commerce to boost network effects, efficiency, and liquidity among consumers, sellers, partners, and creators. Proprietary AI/ML powers hyper-personalization, predictive logistics, fraud detection, and seller tools, with 57% of staff dedicated to tech for seamless scaling. Zero-commission model delivers everyday low prices, cuts seller costs by 35-61% below peers, and supports capital-efficient growth, evidenced by leading order volumes and positive FCF amid Tier 2+ market dominance.

Risks

Persistent losses since 2015 challenge sustained profitability, with FY25 net loss at Rs 3,942 crores despite cash flow gains, potentially requiring more funding. Heavy reliance on CoD, with 72% of H1FY26 shipped orders, raises RTO risks, delivery failures, and cash handling issues in decentralized logistics. Intense competition from Amazon and Flipkart pressures pricing, while Rs 572 crore tax disputes, high 34% attrition, regulatory shifts like data protection laws, and tech vulnerabilities threaten operations and trust.