The IPO of Meesho, the platform that has created a stir in India’s e-commerce market, got off to a strong start today. As soon as the public issue opened for subscription, huge interest was seen from investors. The special thing was that Meesho’s GMP jumped by about 45% in the gray market, which indicated a bang listing even before the issue. Now that India’s e-commerce is rapidly moving towards a low-price, high-volume model, Meesho’s debut has become the talk of the town.
Why is Meesho’s business model special?
Meesho has brought a new revolution in Indian e-commerce, where the big focus is not on metro cities but on tier-2 and tier-3 cities. Meesho’s annual transacting users grew by 46% between FY23 to FY25, which is several times higher than the rest of India’s e-commerce growth (11–20%). 199 million users shopped on the platform in FY25, of which 174 million were from non-metro cities.
Valuation
According to analysts, Meesho’s valuation is around 5 times its FY25 revenue. It is considered expensive, but Meesho’s tremendous scaling, growing orders and India-focused model make it attractive for the long-term. According to Ishan Tanna, Research Analyst, Ashika Institutional Equity Research, right now investors are betting on future potential more than profits. If the company turns its scale into profit, the returns could be huge.
Meesho’s power
- The company’s revenue increased by 23.3% to Rs 9,389.9 crore in FY25.
- Free cash flow positive for two consecutive years.
- Order volume increased from Rs 102.4 crore (FY23) to Rs 183.4 crore (FY25).
- With a zero-commission model, Meesho added millions of regional and unbranded sellers to the platform.
- Proprietary logistics system Valmo played a big role in reducing fulfillment costs.
- Contribution margin has also increased by 200 bps in 2 years to 4.9%.
The risk is also not less…
- Challenge of fraud and cancellation due to increase in cash on delivery orders.
- Tough competition from giants like Amazon and Flipkart.
- Company still in loss, adjusted loss at Rs 2595.3 crore in FY25.
Disclaimer: This is not investment advice but just information. Consult your financial advisors before taking any decision related to money.
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