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BACKGROUND

Incorporated in 2015, Meesho is an e-commerce platform facilitating trade between suppliers and consumers and has emerged as the largest in terms of Orders Placed of 126.1 cr and Annual Transacting Users of ~ 234 mn in India. Co has ~ 7 lakh sellers on the platform which include manufacturers, wholesalers and traders. It focuses on value focussed consumers seeking wide assortment of products at affordable prices with low cost SKUs and vernacular content while operating on low-end smartphones. In addition, Co owns a proprietary and unique technology platform – “Valmo” which orchestrates a multi stage logistics network across multiple logistics partners. Co mainly focuses on categories such as fashion, home & kitchen, beauty and lifestyle.

Details of the Issue

1. Issue is a combination of fresh issue of 38.29 cr shares aggregating to Rs 4250 cr and offer for sale of 10.55 cr shares aggregating to Rs 1171 cr totaling to Rs.5421.2cr. 2. Co plans to utilize the IPO proceeds Investment for cloud infrastructure and payment of salaries of the existing and replacement hires for the Machine Learning and AI.

Investment Rationale

1. Large Customer base and expanding product listings to augment future growth.

2. Zero-commission structure enabling sellers to offer low prices profitably.

3. Optimal Technology usage to support naive consumers/sellers.

Valuation and Recommendation

Meesho has created a strong foothold in the tier 2/3 cities ecommerce business with its unique proposition of zero commission asset light business model resulting in low affordable products ecosystem benefitting sellers, consumers, content creators and logistics players in non-metro cities. Company, however, is yet to post profits; although it has turned free cash flow positive in FY25. Company has posted Ebitda losses of Rs. 579 cr and Rs.693 crs in FY25/H1FY26 respectively. Meesho continues to make investments in technology and logistics which we believe will lead to sustainable profitability in the coming years. Issue at upper price band is available at 5.7x FY25 Price/Sales which looks reasonable and hence recommend ‘Subscribe’ to the issue.

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SEBI Registration number is INH00000176