JM Financial initiates Meesho coverage with 'reduce' rating, sets ₹170 target price
JM Financial initiated coverage on Meesho with a 'Reduce' rating and ₹170.00 target price for March 2027, citing limited upside despite the company's strong market position with 234 million users and operational efficiency. The brokerage expects 27.00% revenue CAGR over FY25-30 but believes growth potential is already priced in at current levels. Meesho generated ₹5.90 billion free cash flow in FY25 with cost-efficient operations, though risks include plateauing logistics benefits and rising competition.
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JM Financial has initiated coverage on Meesho with a 'Reduce' rating and a target price of ₹170.00 for March 2027, citing limited upside potential following the e-commerce platform's strong post-listing performance. The brokerage valued the company using a DCF-based approach, implying a 108x/25x FY28/30 EV/Adjusted EBITDA multiple.
Stock Performance and Market Position
Meesho made its public market debut on December 10, listing at ₹161.20 on the BSE. The stock experienced significant volatility post-listing, initially surging 58.00% to reach a peak of ₹254.65 before correcting nearly 35.60% from its high. As of January 9, the stock was trading at ₹164.00, slightly above its listing price, though it gained 3.60% to ₹171.05 during trading hours.
| Stock Performance Metrics: | Value |
|---|---|
| Listing Price: | ₹161.20 |
| Peak Price: | ₹254.65 |
| Current Trading Price: | ₹164.00 |
| Peak Gain: | +58.00% |
| Correction from Peak: | -35.60% |
Market Dominance and User Base
According to JM Financial, Meesho holds a dominant position in the Indian e-commerce space with approximately 234 million annual transacting users, representing 90.00% of India's online shopper base. The platform operates on a pure-play marketplace model that connects sellers, consumers, logistics partners, and content creators without charging commissions, instead monetising through fulfilment, advertising, and data insights.
Financial Projections and Operational Metrics
The brokerage expects Meesho to deliver strong growth with a 27.00% revenue CAGR over FY25–30, with adjusted EBITDA margins projected at 3.30% as a percentage of NMV by FY30. The company's operational scale includes over 700,000 sellers and 18,000+ logistics partners, processing more than 1.60 billion annualised parcels.
| Key Financial Metrics (FY25): | Amount |
|---|---|
| Adjusted Cost per Shipped Order: | ₹59.10 |
| EBITDA-level Loss per Order: | ₹1.60 |
| Free Cash Flow Generated: | ₹5.90 billion |
| Revenue CAGR (FY25-30): | 27.00% |
| Projected EBITDA Margin (FY30): | 3.30% of NMV |
Operational Strengths and Risk Factors
JM Financial highlighted Meesho's cost leadership and asset-light business model, which enabled the generation of ₹5.90 billion in free cash flow during FY25. The ramp-up of Valmo, Meesho's in-house logistics solution, has further reduced costs and expanded serviceable e-commerce categories across India's Tier 2+ markets.
However, the brokerage identified several key risks including:
- Plateauing logistics cost benefits
- Rising competition in the e-commerce space
- Challenges in advertising-based monetisation
Potential upside risks could emerge from better-than-expected growth, monetisation of content and financing, and development of new revenue streams such as Meesho Mall.
Investment Outlook
Despite acknowledging Meesho's strong market positioning and differentiated strategy, JM Financial believes valuations remain stretched at current market levels. The brokerage advised investors to exercise caution amid high volatility and upcoming stock unlock events, which could impact supply dynamics in the near term. While the company demonstrates strong operational metrics and market dominance, much of the upside from its growth potential appears to be priced in at current valuation levels.
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