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Meesho Stock: Neutral View Amid IPO Rally
12 Jan
Summary
- BofA initiated coverage with a Neutral rating.
- Advertising and logistics are key growth drivers.
- Stock trades above IPO price despite recent dip.
BofA Securities has initiated coverage on the recently listed e-commerce firm Meesho, setting a Neutral rating and a Rs 190 price target. The brokerage highlighted emerging monetisation avenues in advertising and logistics, while expressing caution regarding the stock's valuation after a substantial post-IPO surge. This measured approach indicates a transition from initial listing enthusiasm to a closer examination of operational performance and market value.
Advertising is a key focus, with Meesho shifting from a cost-per-click model to a return-on-investment-based approach, similar to those used by platforms like TikTok Shop. This change has reportedly boosted ad revenues. Logistics is identified as the second significant monetisation driver, with Meesho prioritizing low costs for sellers to enable affordable product offerings and efficient service to value-conscious consumers.
Despite a 5% dip on Monday, Meesho shares remain well above their IPO price of Rs 111, showing a 46% increase. The stock has experienced considerable volatility since its debut on December 10, trading as high as Rs 254 before profit-taking. BofA's initiation aims to bring focus to the company's operational strategies and the sustainability of its business model as a publicly traded entity.
