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.

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.

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.

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.