If any new stock has attracted the most attention of investors in the stock market these days, it is the e-commerce company Meesho. The shares of this recently listed company created a new record for the second consecutive day and gave surprising returns to the investors. On Wednesday, Meesho shares reached the upper circuit of 20% at Rs 216.35 on BSE. Such fast growth after IPO is seen in very few stocks.
If we look at the IPO price, Meesho has given an excellent return of about 95% so far. This stock has closed strongly for the third consecutive trading session. In the last three days alone, it has registered a rise of about 31%, which has given huge profits to investors.
Reason for rise in Meesho’s stock?
The biggest reason for this rise in Meesho’s shares is considered to be the ‘Buy’ rating of global brokerage firm UBS. UBS has initiated coverage on Meesho with a target price of ₹220, which is about 10% above the current level. After this positive report, tremendous buying of shares was seen in the market.
UBS report
In its report, UBS has cited Meesho’s asset-light business model, rapidly growing user base and continuous improvement in financial performance as major strengths. According to the brokerage, Meesho’s negative working capital model makes it different from other internet-based businesses and helps it generate strong cash flows in the future.
Meesho’s Net Merchandise Value
The report states that Meesho’s net merchandise value (NMV) may grow at a CAGR of 30% between financial years 2025 to 2030. During the same period, the company’s annual transacting users are expected to increase from 19.9 crore to 51.8 crore. At the same time, order frequency may also increase from 9.2 times to 14.7 times. However, some experts have also said that there will be limited upside in the near future. According to Choice Institutional Equities, the base-case target for the stock at the current level is ₹200, while in the bull-case it can go up to ₹234, provided the company accelerates its path to profitability.
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