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India’s Fastest-Growing Value-Commerce Marketplace: Meesho Ltd has built one of the country’s most inclusive digital commerce ecosystems serving 234 million annual transacting users (ATU), growing at ~21% CAGR over FY23–25. The platform has uniquely unlocked Bharat’s mass-market potential, with nearly 88% of users coming from outside the top eight cities. It is India’s fastest-growing value-commerce marketplace with 21–23% market share in organized fashion retailer, leading in home & kitchen (23–25% share), and third largest in Beauty & Personal Care (BPC; 8-10% share), highlighting its category dominance.

Zero Commission Model: The platform operates on a zero-commission model, charging sellers only for logistics and advertising keeping seller economics healthy and product prices significantly lower. This is reflected in its low average order value (AOV; ~Rs.265), 68–73% below typical e-commerce platforms, driving a frequency-led model. Meesho does not operate private labels, encouraging wider participation, while lower prices attract more users. This has driven robust order activity, with over 0.7 million sellers fulfilling 2.27 billion orders (TTM Sep’25) and annual order frequency rising from 7.5x to over 9x over FY23-25.

Valmo (Logistics Flywheel arm) driving structural cost advantage: Launched in Aug’22, Valmo, Meesho’s asset-light logistics arm, partners with 18,000+ local providers and now handles ~65% of shipped orders (~700 million in 1HFY26). Valmo’s cost per shipment is 10–11% cheaper, contributing to a reduction in Meesho’s variable cost per order from ~Rs.50 in FY23 to ~Rs.43 in FY25. As density rises, management sees further cost reduction potential; strengthening the company’s long-term moat in low-ticket commerce.

Improving Unit Economics: Revenue grew at 21% CAGR while contribution margin rose from ~3% to ~5% of Net Merchandise Value (NMV) over FY23–25, supported by logistics efficiency and rising ad revenue. While margins softened to ~4% in 1HFY26 due to user acquisition investments, Meesho’s strong operating leverage is evident from server & software costs rising only ~5% v/s ~34% CAGR in order volumes over FY23–25. This combined with positive free cash flow despite FY25 losses, signals strengthening operating discipline.

Issue Objective: The ~Rs.54 bn IPO comprises a fresh issue (Rs.42bn) and OFS (Rs.12bn). Proceeds will primarily fund cloud infrastructre, AI capabilities, marketing/brand initiatives and platform expansion.

Valuation & View: With a unique zero-commission & asset light model, deep Bharat penetration, a defensible logistics flywheel, and a rapidly scaling ad/content commerce engine, Meesho is positioned as one of India’s most powerful long-term consumer-tech stories. Its focus on affordability and frequency creates a structural moat that is difficult for traditional e-commerce players to replicate. At 4.5x Price/Sales (Q2FY26 annualized & diluted), valuations look reasonable compared to other e-commerce players (average ~7x P/S); Hence, we recommend investors to ‘Subscribe’ to the issue.

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