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Meesho IPO Launch: Value E-commerce Bets on Bharat
3 Dec
Summary
- Meesho's IPO opens today with strong investor interest and a significant grey market premium.
- The e-commerce giant targets Tier-2 and Tier-3 India, capitalizing on the value purchase trend.
- Despite current losses, rapid user growth and operational efficiencies fuel optimism for profitability.
Meesho's Initial Public Offering (IPO) commenced today, marked by substantial investor enthusiasm and a promising grey market premium. The company, a dominant force in India's Tier-2 and Tier-3 markets, is well-positioned to benefit from the increasing consumer preference for value-driven purchases. This strategic focus on lower-ticket items and unbranded goods has fueled rapid expansion.
Despite reporting losses, Meesho's significant user base expansion, with a 46% growth in annual transacting users between FY23 and FY25, outpaces broader e-commerce growth. The majority of these users, a remarkable 17.4 crore in FY25, hail from outside major metropolitan areas, underscoring its deep penetration into 'Bharat'. The company's proprietary logistics system, Valmo, contributes to improved fulfillment costs and operational efficiencies.
Analysts view Meesho's valuation as ambitious but justified given its rapid scale in value e-commerce. The company has demonstrated positive free cash flow for two consecutive years, with LTM FCF of Rs 581.5 crore as of H1FY26. While ongoing investments in technology and marketing are noted, a subscribe recommendation is anchored on its improving operating profile and expanding user funnel.
