Bank of America Securities has initiated research coverage on Meesho, the Indian e-commerce platform, with a neutral rating and a target price of ₹190.00 per share. This marks the investment bank's entry into formal coverage of the company's stock performance and market outlook.

Coverage Details

The brokerage's decision to begin coverage reflects Meesho's growing prominence in the Indian e-commerce landscape. The neutral rating suggests that Bank of America Securities views the stock as fairly valued at current levels, with the ₹190.00 target price providing a benchmark for the firm's valuation assessment.

Market Implications

The initiation of coverage by a major international investment bank like Bank of America Securities indicates institutional interest in Meesho's business model and market position. A neutral rating typically suggests that analysts see the stock as appropriately priced relative to its fundamentals and growth prospects, neither significantly overvalued nor undervalued at current market levels.

Meesho shares staged a recovery on January 9, rebounding 5% to reach the day's high of ₹173.00 during trading sessions. This recovery followed a challenging three-day period during which the e-commerce platform's stock had declined by a cumulative 10%, signaling renewed buying interest at lower price levels.

Key Factors Behind Recent Volatility

The recent decline in Meesho's stock price was primarily attributed to two significant developments. The expiration of the one-month lock-in period for pre-IPO investors on Wednesday increased the supply of shares in the secondary market. This lock-in expiry freed approximately 109.90 million equity shares, representing 2% of the company's total outstanding equity.

A lock-in period in an IPO refers to a predetermined timeframe during which certain shareholders—including the company, promoters, and pre-IPO investors—are restricted from selling their shares in the open market.

Management Changes Impact Stock Movement

Adding to the market uncertainty, Meesho announced senior management changes through regulatory filings on January 7. Megha Agarwal, General Manager – Business and Senior Management Personnel, tendered her resignation from the company, effective the same day. In a separate filing, the company announced that Milan Partani, User Growth and Content Commerce, and Senior Management Personnel, will assume the role of General Manager – Commerce Platform while continuing as Senior Management Personnel.

JM Financial Initiates Coverage with Cautious Outlook

Despite the stock's recent recovery attempt, JM Financial has initiated coverage on Meesho with a 'Reduce' rating, assigning a target price of ₹170.00. The brokerage expects limited upside going forward, citing the sharp post-listing run-up in share prices and stretched valuations.

While JM Financial remains optimistic about Meesho's long-term growth prospects and potential for higher profitability, the stretched valuations lead the brokerage to foresee limited near-term upside. The brokerage expects Meesho to continue being a flagbearer of Indian e-commerce and serve as the first digital commerce platform for a large segment of the Indian population.

Stock Performance Analysis

Despite the recent volatility, Meesho's stock performance since its public debut has been remarkable. The shares made a blockbuster debut on December 10, listing at ₹162.00, representing a 46% premium over the issue price of ₹111.00. Following this robust start, the stock maintained momentum in subsequent sessions, reaching a peak of ₹254.00 and emerging as one of the strongest post-listing performers among mainboard IPOs.

Although the stock attempted recovery in the recent session, it remains 32% below its recent highs. Nevertheless, the strong post-listing rally has kept the stock trading 56% above its IPO price, demonstrating continued investor confidence in the company's long-term prospects despite near-term challenges.