Meesho, the Indian e-commerce platform, made an impressive debut on the stock market, opening at Rs 161, which marks a 46% increase from its initial public offering (IPO) price. This strong performance follows a successful IPO that raised Rs 5,421.20 crore, attracting overwhelming investor interest with a subscription rate of 79 times. The company’s shares witnessed active trading, showcasing considerable investor enthusiasm and establishing Meesho as one of the most awaited tech listings of the year.
Meesho’s IPO Details
The IPO for Meesho commenced on December 3 and wrapped up on December 5, offering a total of 27.79 crore shares. This consisted of a fresh issue of approximately 38.29 crore shares valued at Rs 4,250 crore, in addition to an offer for sale of 10.55 crore shares. By the end of the bidding period, there was impressive demand, with applications for 2,197 crore shares. Institutional investors exhibited the highest interest, with the Qualified Institutional Buyer (QIB) category seeing a subscription rate of 120.18 times. Non-institutional and retail investors subscribed at rates of 38.16 times and 19.08 times, respectively. Share allotment is anticipated to be completed on December 8, followed by the crediting of shares to demat accounts on December 9. Before the listing, grey-market quotes suggested a promising outlook, with premiums indicating a potential listing price significantly above the upper price band of Rs 111.
Market Outlook and Analyst Insights
Analysts are optimistic about Meesho’s growth potential, especially in tier-2 and tier-3 cities, where demand for e-commerce services is increasing. Prasenjit Paul, an equity research analyst, noted the robust growth opportunities in these markets but cautioned that achieving profitability remains a challenge. He emphasized the importance of monitoring sustainability and the company’s relatively high valuations. InCred has also assigned a “Subscribe” rating for short-term gains, highlighting attractive market cap-to-sales ratios. However, they noted that reaching sustained EBITDA breakeven would take time due to challenges in supply chain optimization and maintaining competitive pricing.
Financial Performance and Growth Metrics
Meesho reported a revenue of Rs 9,390 crore for FY25, reflecting a 23.3% increase from the previous year while also narrowing its EBITDA losses. The company experienced an adjusted loss of Rs 2,595 crore for FY25. Analysts pointed to positive trends, with ICICI Direct observing that Meesho has demonstrated strong operating leverage and positive free cash flow for two consecutive years. The platform’s order volumes rose from 102 crore in FY23 to 183 crore in FY25, driven by its “everyday low price” strategy. Additionally, contribution margins improved by 200 basis points to 4.9% over two years. Despite these positive indicators, challenges remain, including reliance on cash-on-delivery orders, which may lead to fraud and cancellation issues, as well as competitive pressures in the market.
Digihunt is not a financial advisor and this is not investment advice.
