Meesho shares get a thumbs up after blockbuster debut; time to book profits?

Meesho, after a blockbuster debut on Wednesday, got a thumbs up from Choice Institutional Equities. The brokerage firm has initiated coverage on the stock suggesting a sharp rally in the stock. However, the majority of the upside was priced in during the maiden trading session but target prices suggest some more steam left in the counter.

Meesho commands 29-31 per cent of India’s ecommerce shipment volumes, with NMV expected to grow at 31 per cent CAGR over FY25–28E, supported by category leadership in fashion, home, kids and BPC. Order frequency has risen to 9.7 times (LTM FY26), while customer acquisition cost (continues to decline, driving contribution margin expansion to 5 per cent, said Choice.

Shares of Meesho were listed at Rs 162.50, signaling a 46.4 per cent premium for the investors over the issue price of Rs 111. However, the stock extended its gains and jumped another 10 per cent to Rs 177.55 in its maiden trading session to take overall gains to 60 per cent over its IPO price. Its total market capitalization hit Rs 80,000 crore mark on debut.

Logistics leverage through Valmo, fulfilment cost compression and stable take rates strengthen profitability visibility. Meesho is on track for Ebitda breakeven in FY27E, with operating leverage accelerating thereafter. Adjacencies (Meesho Mall, Financial Services, AI-led efficiency) provide incremental monetisation upside with minimal dilution to the core value-led model, it noted.

To recall, Meesho's Rs 5,421.20 crore IPO was open for bidding between December 03-05 apiece, which was overall subscribed more than 79 times, fetching bids worth Rs 2.43 lakh crore with more than 62.75 lakh applications from the investors. Investors could apply for a minimum of 135 equity shares and its multiples thereafter.

"We initiate coverage on Meesho with a 'buy' rating and a target price of Rs 200, valuing the company at 4 times FY28E EV/revenue, with a three stage DCF performed purely as a sanity check. Meesho remains in the high-growth phase of the platform lifecycle and is expected to deliver 31 per cent FY25–28E revenue CAGR," Choice added.

A few analysts have also shared their views on Meesho shares post their solid listing. They are upbeat on the stock citing its strong market share in the Tier II and Tier III markets, asset light business model, improving unit economics, and rapidly improving path to profitability.

Investors may remain cautious about rising competitive pressures from large incumbents, regulatory clarity on deep discounting and small-seller protection and sustaining the profit, said Shivani Nyati, Head of Wealth at Swastika Investmart. "Investors may consider booking partial profits while holding the remaining position for long-term gain, keeping a stop-loss around Rs 130," she adds.

Echoing the similar tone, Dr Ravi Singh, Chief Research Officer from Master Capital Services said that Investors who have received Meesho the shares may book partial profit at listing at premium and can keep rest for long-term. On the other hand, those who did not get shares in IPO may buy when price comes down, he suggested.

On the other hand, Prashanth Tapse, Senior VP of Research at Mehta Equities believes the 50 per cent debut return makes the valuations expensive for the investors. "We believe valuations are stretching higher assuming strong earnings in coming quarters.”

Allotted investors with a higher risk appetite could look to hold the stock for 12–18 months, as Meesho offers exposure to one of India’s fastest-scaling, value-driven ecommerce franchises. The company has established robust leadership across key categories and scale positions it well for long-term growth, he adds.