Meesho breaks from new-age playbook with a sensibly priced IPO

As Meesho heads for its much-watched stock market debut, analysts say the social-commerce platform has done what few new-age tech firms did at listing: price itself sensibly. The company has set a band of ₹105–111 per share, valuing it at ₹50,096 crore at the top end, with the IPO raising ₹5,421 crore. The sharply reduced OFS — trimmed nearly 40% from the earlier plan — signals that existing investors prefer to stay in rather than cash out, adding to the perception that the issue has been conservatively structured. Crucially, Meesho’s last primary fundraise in September 2021 valued it at $4.9 billion. The IPO implies about $5.8 billion, a 19% premium — modest compared to the steep uplifts seen in earlier tech listings. “They haven’t positioned the valuation too aggressively,” said Fisdom’s Head of Research, Nirav Karkera. “Pricing seems reasonable — close to what investors would accept.” Few True Comparables in the Listed Universe Analysts say Meesho stands apart from other consumer-tech names that listed recently. Its combination of huge user scale, low AOV (Average Order Value), asset-light fulfilment and NMV-linked (Net Market Value) economics makes it hard to benchmark directly against Zomato, Nykaa or Mamaearth. “There aren’t really any direct peers… given the size and scale Meesho has achieved, there are very few comparable companies,” Karkera said. Comparisons to other platforms, analysts note, are used only to gauge sentiment, not to derive valuation multiples. Scale: Off the Charts, but Not Directly Comparable Meesho posted a GMV of ₹701.6 billion over the last twelve months, but comparisons with listed players are difficult because peers disclose revenue, not GMV. Meesho’s own FY25 revenue from operations was ₹5,735 crore, which reflects only the commission slice of transactions — not the gross merchandise value. The seller base expanded to 706,471, though average orders per seller declined — a sign of rising competition. “Large numbers of sellers are eyeing the same customer base, diluting order volumes,” said Sunny Agrawal, Head of Fundamental Research at SBI Securities. “This could increase churn and pressure quality control.” Unit Economics: Cash Flow Turns Positive Despite scale pressures, Meesho has improved multiple operating metrics. Contribution margin rose from 2.9% in FY23 to 4.95% in FY25, customer acquisition costs have dropped over three years, and importantly, the company generated positive free cash flow of ₹351 crore in FY25 (after ₹304 crore in FY24). Meesho reported an adjusted EBITDA margin of –0.39%, adjusted for ESOP charges, share-based payments and one-time restructuring costs. “With improving unit economics, positive free cash flows and cost management, we believe Meesho is positioned for sustainable profitability,” Agrawal said. Losses widened to ₹460 crore in FY25, but this includes a one-time tax expense of ₹743 crore related to a business combination. Excluding that, Meesho would have been profitable by ~₹283 crore, suggesting operating performance is improving even as the headline number shows a loss. Analysts Want to See What’s Driving Losses Karkera noted that spending heavily at this stage is typical for a scaled platform focused on penetration and brand-building. “If losses come from aggressive customer acquisition and those customers are remunerative, your IRR improves faster,” he said. In Meesho’s case, rising contribution margins and positive cash flows indicate that the unit economics are trending in the right direction. Baring this not fructifying, some key concerns, according to a note by Axis Capital, are high reliance on cash-on-delivery, dependence on a limited set of logistics partners, and platform outages in Nov 2024 and April 2025. Meesho also carries contingent liabilities under Ind AS 37, which could impact its financials if crystallised. Valuation: Not Aggressive, Not Cheap Agrawal said Meesho is best valued through a DCF framework given its NMV-based model. At the upper band: Price-to-NMV: ~1.7x Post-issue Price-to-Sales: ~5.3x Both are below entry multiples of earlier consumer-tech listings. But risks persist: low-margin unbranded categories anchor Meesho’s mix, profitability has not stabilised, and the company faces entrenched rivals in Amazon and Flipkart. Karkera added, “They’ve left some money on the table. Downside looks limited because the valuation isn’t stretched, while upside may come from scarcity — very few listed players offer exposure to this segment.”