Meesho Stock Slides 35% From Peak After 129% Post-IPO Rally Amid Valuation Concerns
Meesho shares have declined 35% from peak levels after a remarkable 129% post-IPO rally, facing pressure from anchor lock-in expiry, elevated valuations, and cautious analyst coverage. Despite recent volatility, the company maintains strong operational metrics with 286 million monthly active users and improving logistics efficiency. Brokerages have initiated mixed coverage with JM Financial's 'Reduce' rating and BofA's 'Neutral' stance, both acknowledging the platform's market-leading position while expressing valuation concerns.
*this image is generated using AI for illustrative purposes only.
Meesho's spectacular post-IPO performance has hit turbulence, with shares declining 35% from their peak amid mounting valuation concerns and increased supply following the anchor lock-in expiry. The e-commerce platform, which listed on December 10 at a 46% premium, witnessed an extraordinary 129% rally that pushed the stock to ₹254.40 before the recent correction set in.
Stock Performance and Current Pressures
The company's shares have experienced significant volatility since reaching their peak, falling to a low of ₹153.89 before entering recovery mode. According to Abhinav Tiwari, Research Analyst at Bonanza, multiple factors are contributing to the ongoing pressure on the stock.
| Key Performance Metrics: | Details |
|---|---|
| IPO Listing Premium: | 46% |
| Peak Rally: | 129% above IPO price |
| Peak Price: | ₹254.40 |
| Recent Low: | ₹153.89 |
| Decline from Peak: | 35% |
"This lock-in related supply, combined with broader risk-off sentiment toward high valuation new age stocks, has resulted in valuation de-rating, even as the underlying business performance remains largely intact," Tiwari explained. Market data indicates that up to 110 million shares, representing approximately 2% of the company's outstanding equity, have become tradeable following the lock-in expiry.
Brokerage Recommendations and Valuations
Recent analyst coverage reflects cautious optimism tempered by valuation concerns. JM Financial has initiated coverage with a 'Reduce' rating, setting a DCF-based target price of ₹170 per share for March 2027. The brokerage's valuation analysis yields equity value implications of 108x/25x FY28/FY30 EV/adjusted EBITDA multiples.
| Brokerage Coverage: | Rating | Target Price | Upside/Downside |
|---|---|---|---|
| JM Financial: | Reduce | ₹170 | DCF-based |
| BofA Securities: | Neutral | ₹190 | 15% upside |
BofA Securities has also initiated coverage with a 'Neutral' rating and price target of ₹190 per share, suggesting 15% upside from current levels. JM Financial noted that while the stock price has run up sharply, it leaves minimal room for error despite the company's differentiated business model and key position in Indian e-commerce.
Operational Strengths and User Metrics
Despite market pressures, Meesho's operational fundamentals remain robust. The platform boasts 286 million monthly active users, the highest among Indian e-commerce platforms. Significantly, around 234 million users made at least one purchase during the year, demonstrating strong conversion rates particularly in smaller towns.
| User Base Metrics: | Numbers |
|---|---|
| Monthly Active Users: | 286 million |
| Users with Purchases: | 234 million |
| Market Position: | Highest among Indian e-commerce platforms |
"This shows that Meesho is not just a browsing app but has strong conversion from users to buyers, especially in smaller towns," Tiwari highlighted.
Logistics Efficiency Improvements
The company has demonstrated significant operational improvements, particularly in logistics efficiency. Cost per order has decreased substantially from ₹55 in FY23 to ₹46 in FY25, achieved through building its proprietary logistics platform called Valmo and improving delivery density.
| Logistics Improvements: | FY23 | FY25 | Change |
|---|---|---|---|
| Cost per Order: | ₹55 | ₹46 | -16.4% |
| Cash on Delivery Orders: | >90% | 61% (H1 FY26) | Significant reduction |
Additionally, cash on delivery orders have reduced from more than 90% to approximately 61% in the first half of FY26, further helping reduce delivery failures and associated costs. JM Financial noted that Meesho has perfected the e-commerce digitisation template for Bharat with significant headroom for online penetration in regional and unbranded products, with market-dominating volume at low margins providing substantial competitive advantage.
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