Meesho shares: Jefferies initiates coverage; target price hints at 34% upside

Jefferies has initiated coverage on Meesho Ltd with a 'Buy' rating and a target price of Rs 225, hinting at a potential 34 per cent upside, citing its scale-led value commerce platform anchored in affordability, discovery, & logistics efficiency.  The foreign brokerage said Meesho has a loyal user base, supported by a deep MSME supply network, which is "driving a strong flywheel."

A growth-led approach should keep monetisation back-ended, with take rates expanding over time, Jefferies said as it forecast 25 per cent Net Merchandise Value (NMV) growth compounded annually and 3 per cent adjusted Ebitda margin by FY30. Jefferies said Meesho's balance sheet is net cash, with negative working capital, supporting capital-efficient growth.

Following Jefferies' report, shares of Meesho gained 2.82 per cent to Rs 171.65 on BSE in early trade.

Jefferies said recent quarters for Meesho were impacted by logistics capacity constraints, which are now behind and should support margins. Meesho carries no inventory or receivables, resulting in negative working capital, it said noting that the business is expected to turn free cash flow (FCF) positive by FY28.

"Value-led platforms require tight control over their ecosystems, creating a key moat that is difficult to replicate, as seen with retailers like DMart and VMM. Valuing Meesho is tough, given its limited listed history and lack of a clear peer set. EV/Ebitda appears elevated on a low base, so we anchor valuation on NMV at 1.6 times Jun-28E (broadly similar to Blinkit), implying a Rs 225 price target," Jefferies said.

The foreign brokerage said Meesho's revenue is services-led, driven by fulfilment, ads and seller tools rather than commissions. Monetisation is deliberately back-ended, with a focus on expanding the total addressable market (TAM).

"Advertising (3 per cent of NMV) and adjacencies like content commerce & Meesho Mall provide scalable, high-margin levers without diluting the value proposition. Horizon 2 experiments add further optionality," Jefferies said.

It said Meesho's zero seller commission framework drives simplicity and transparency, along with stronger unit economics, enabling rapid onboarding, incl. first-time online merchants. The asset-light logistics model, combining captive (Valmo) & 3P partners, keeps costs competitive, feeding into lower pricing, Jefferies said.

"The platform’s four-sided ecosystem of users, sellers, logistics, & content drives a growth loop. Increasing order density improves assortment & pricing, while logistics optimisation lowers fulfilment costs & supports sustained, volume-led growth & scale, as reflected in 26.4 crore ATUs & over 250 crore orders," Jefferies said.