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Company overview

Incorporated in 2015 and headquartered in Bengaluru, Meesho Ltd. operates a multi-sided e-commerce marketplace that connects consumers, sellers, logistics partners, and content creators. Meesho’s operating philosophy centres on expanding access to affordable online shopping across consumer segments, reinforced by an “everyday low prices” value proposition. The platform has become India’s largest e-commerce player by Placed Orders and Annual Transacting Users for the twelve months ended June 30, 2025. The company follows a zero-commission marketplace model and generates revenue primarily through seller services rather than consumer charges (zero-platform fees). Its core monetisation streams include logistics and fulfilment fees, advertising solutions and data/insight tools for sellers.

Objects of the offer

* Investment for cloud infrastructure in the company subsidiary Meesho Technologies Pvt Ltd (MTPL).

* Payment of salaries of existing and replacement hires for the Machine Learning and AI and technology teams for AI and technology development undertaken by MTPL.

* Investment in MTPL for expenditure towards marketing and brand initiatives.

* Funding inorganic growth through acquisitions and other strategic initiatives and general corporate purposes.

Investment Rationale

* Focused Penetration in India’s Value-Conscious Consumer Segment - Meesho’s core consumer base spans diverse income groups in India, but its strongest adoption comes from value-conscious shoppers seeking affordable products across a wide assortment at a single destination. Women account for 54%+ of its customer base, reflecting strong traction in everyday lifestyle and household categories. While India’s overall e-commerce user base grew only 11 - 12% during FY23 - 25, Meesho’s annual transacting users expanded by 46% over the same period. This outperformance was driven largely by semi-urban and rural consumers (88% orders from outside Top 8 cities in India) - segments characterized by regional preferences, vernacular content consumption, and heavy usage of low-end smartphones. This shift has resulted in lower average order values but substantially higher order frequencies, validating Meesho’s positioning as the platform of choice for high-volume, low-ticket retail.

*Low cost and asset light business model - Meesho operates a technology-led, asset-light marketplace with a zero-commission structure for sellers and no platform fees for consumers, enabling low-cost order fulfilment. This enables sellers to offer a wide, affordable assortment spanning unbranded goods, regional labels and national brands, reinforcing Meesho’s value-led positioning. Scale benefits and ecosystem integration have allowed the company to introduce complementary initiatives such as low-cost local logistics network and financial services, forming the two business segments of Marketplace and New Initiatives. The company’s “everyday low prices” rather than Discount cycles and event-based sale spikes proposition ensures consumers access affordable products without dependence on flash sales or time-bound discounts. As scale expands, the average cost charged to sellers continues to decline, reflecting operating leverage and platform efficiencies.

* Proprietary Platform Underpinned by Self-Reinforcing Flywheels - The Company operates a multi-sided technology platform that drives e-commerce in India by connecting four key stakeholders: consumers, sellers, logistics partners, and content creators. This platform is built on multiple-scale self-reinforcing flywheels, which generate vast amounts of data regarding consumer preferences, pricing trends, seller performance, and content attractiveness. This data-driven approach enables the Company to adapt rapidly and continuously to improve its offerings, supporting long-term competitiveness and growth.

* Improving operational KPIs - Meesho’s operating metrics reflect strong platform momentum, with Annual Transacting Users rising from 136 million in FY23 to over 213 million by Q1FY26 and a growing seller base exceeding 575,000, which together enhance assortment depth and pricing competitiveness. Placed Orders have scaled rapidly - from 1.02 billion in FY23 to 1.83 billion in FY25 - accompanied by an increase in order frequency from 7.5x to 9.5x, underscoring rising engagement and platform stickiness. This growth has translated into steady expansion in GMV and NMV, with Marketplace NMV growth accelerating from 21% in FY24 to 36% in Q1FY26, indicating stronger monetisable throughput and improved seller economics. The consistent rise across users, sellers, orders and NMV demonstrates growing operating leverage and reinforces Meesho’s ability to sustain its everyday low-price value proposition while strengthening the profitability pathway of its core marketplace.

* Financial Performance - Revenue from operations increased from Rs.57.3 billion in FY23 to Rs.93.9 billion in FY25, reflecting higher order frequency and improved seller monetisation. Profitability metrics tracked a steady improvement on the back of fulfilment cost efficiencies and operating leverage. The three months ended June 30, 2025, however, reflected a higher loss run-rate due to exceptional restructuring expenses, elevated ESOP charges and temporarily higher logistics/cloud costs, rather than weakening fundamentals. Excluding these one-off items, business momentum continued to trend positively. Overall, the financial trajectory reflects a scaled marketplace with improving unit economics, increasing monetisable throughput and a narrowing path to breakeven.

Industry Trends

The Indian retail market, valued at approximately Rs.83 trillion (USD978 billion) in FY25, is projected for sustained expansion at a CAGR of 8 -10% to Rs.123 - Rs.135 trillion (USD1.4 - 1.6 trillion) by FY30. This growth is fundamentally supported by India’s favorable macroeconomic factors, increasing urbanization, and significant consumption uptake across Tier 2+ cities. The supply side remains highly fragmented, with regional brands and unbranded products forecasted to retain a substantial share of 70 - 74% of total retail spends by FY30. Organizing this fragmented supply is crucial, positioning organized retail (including e-commerce) to capture 32 - 34% of the market by FY30. Within this segment, e-commerce is the fastest-growing format, projected to expand robustly at a 20 - 25% CAGR to reach Rs.15 - 18 trillion (USD174 - 214 billion) by FY30. The primary driver for this future growth lies in non-electronics categories, where penetration remains low (approximately 5%). Value-focused e-commerce platforms are strategically designed to address India’s affordability-led demand by efficiently aggregating fragmented supply, a business model that has proven dominant in mature markets such as China.

Key risks

* Sustained Profitability Still Unproven - Despite strong scale benefits and improving unit economics, the company remains loss-making. Profitability is sensitive to fulfilment costs, cloud expenses and employee-related costs; any delay in cost optimisation or higher spending to drive growth could prolong the path to break-even.

* Competitive Intensity & Replication Risk - Existing players and new entrants have the financial capacity to target the value/everyday-low-price segment and invest aggressively in logistics and incentives. Replication of Meesho’s model - especially in Tier-2/3 markets and low-AOV categories - could pressure margins and retention.

* Strength of quality control systems - Because Meesho allows very large number of small, often unbranded or informal sellers (including home-based sellers, small manufacturers, reseller/distributors, etc.), the variability in quality manufacturing standards, packaging, and compliance remains high.

Outlook

The company has built a defensible position in the value-first, low-AOV segment, targeting semi-urban and rural India where e-commerce penetration remains underdeveloped. Continued scale benefits and operating efficiencies - especially through its proprietary logistics platform, Valmo - are expected to drive further margin improvement. While the company has historically incurred losses since inception, recent operational momentum shows improvement, having achieved positive Last Twelve Months Free Cash Flow (LTM FCF) in FY24 and FY25.

On valuation, Meesho’s implied Market Capitalisation to Revenue from Operations (P/S equivalent) for FY25 is broadly aligned with the median of its listed peer set and at a discount to the peer average. The company’s implied P/S (FY25) of ~5.5× is positioned below the peer average (~7.19×) and slightly below the median (~6.25×), indicating a reasonable valuation relative to listed comparables that trade between 2.45× and 15.59×

While near-term earnings visibility remains limited, the long-term growth opportunity, strong market fit, and improving fundamentals support participation with a medium-term outlook. Based on the above views, we provide a “Subscribe” rating for the IPO.

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