As Meesho prepares for one of India’s most anticipated stock market debuts, analysts say the social-commerce firm has done what very few new-age tech companies dared to do at listing: price its IPO sensibly, cut down the offer-for-sale (OFS), and showcase improving unit economics that reduce downside risks.

The company has set its IPO price band at ₹105–111 per share, valuing it at ₹50,096 crore at the upper end. The public issue will raise ₹5,421 crore, with the sharply reduced OFS signalling strong investor conviction. According to the filing, the OFS has been trimmed by nearly 40% from the earlier plan, a move analysts interpret as existing shareholders choosing to stay invested instead of cashing out.

Importantly, Meesho’s last primary fundraise in September 2021 valued the company at $4.9 billion. The IPO now implies a valuation of $5.8 billion, only a 19% premium. Compared to aggressive valuations seen in earlier tech IPOs, this uplift is modest—something analysts say investors will appreciate.
“They haven’t positioned the valuation too aggressively… pricing seems reasonable and close to what investors would accept,” said Nirav Karkera, Head of Research at Fisdom.

Few True Comparables in the Market

Meesho stands in a category of its own within the listed consumer-tech universe. The company’s model—large user scale, low Average Order Value (AOV), asset-light logistics, and Net Merchandise Value (NMV)-linked economics—makes it difficult to directly benchmark against Zomato, Nykaa or Mamaearth.

According to analysts, these companies can offer sentiment indicators but not valuation yardsticks. “There aren’t any direct peers… the size and scale Meesho has achieved has very few comparable companies,” Karkera said.

Scale: Massive, but Not Comparable by Metrics

Meesho reported a GMV of ₹701.6 billion over the last twelve months. But here lies a challenge: most listed peers disclose revenue, not GMV, making apples-to-apples comparisons impossible.

Meesho’s own FY25 revenue from operations stood at ₹5,735 crore, which captures only the commission slice from marketplace transactions.

On the supply side, Meesho’s seller ecosystem expanded sharply to 706,471 sellers. However, the company witnessed a decline in average orders per seller—something analysts attribute to rising competition.
“Large numbers of sellers are eyeing the same customer base, diluting order volumes… this may increase churn and pressure quality control,” said Sunny Agrawal, Head of Fundamental Research at SBI Securities.

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Unit Economics Strengthen: Free Cash Flow Turns Positive

Despite scaling challenges, Meesho has posted significant improvements in multiple operating metrics.

• Contribution margin rose from 2.9% in FY23 to 4.95% in FY25

• Customer acquisition costs fell consistently over three years

• Free cash flow turned positive at ₹351 crore in FY25, compared to ₹304 crore in FY24

The company’s adjusted EBITDA margin is -0.39%, after adjusting for ESOP-related charges, share-based payments, and one-time restructuring expenses.

According to Agrawal, the fundamentals show clear improvement:
“With improving unit economics, positive free cash flows and cost management, Meesho is positioned for sustainable profitability.”

Losses widened to ₹460 crore in FY25, but this includes a one-time tax expense of ₹743 crore arising from a business combination. Excluding this, Meesho would have recorded an approximate profit of ₹283 crore, highlighting an improving underlying performance despite the headline loss.

Analysts Seek Clarity on What Drives the Losses

While the company remains in the red, analysts say high spending at this stage is typical for a scaled platform doubling down on customer acquisition and brand building.

Karkera explained:
“If losses come from aggressive customer acquisition and those customers are remunerative, your IRR improves faster.”

In Meesho’s case, rising contribution margins and positive free cash flows suggest that the core business engine is strengthening.

However, risks persist. According to Axis Capital, key concerns include:

• High reliance on cash-on-delivery

• Dependence on a limited set of logistics partners

• Platform outages in November 2024 and April 2025

• Contingent liabilities under Ind AS 37 that could impact financials if triggered

Valuation: Reasonable but Not Exactly Cheap

Agrawal says Meesho’s NMV-linked business model makes DCF (Discounted Cash Flow) the most appropriate valuation method.

At the upper price band:

• Price-to-NMV: ~1.7×

• Post-issue Price-to-Sales: ~5.3×

Both metrics are lower than entry multiples of earlier consumer-tech listings, indicating measured pricing.

Still, analysts caution that:

• Meesho’s mix is dominated by low-margin unbranded categories

• Profitability is not yet stable

• Competition from Amazon and Flipkart remains intense

Karkera said:
“They’ve left some money on the table. Downside looks limited because the valuation isn’t stretched, while upside may come from scarcity — very few listed players offer exposure to this segment.”

Conclusion

As Meesho moves towards its much-watched IPO, it stands out for taking a disciplined, investor-friendly approach rather than the valuation-chasing strategies seen in earlier tech listings. With improving unit economics, strong seller expansion, positive cash flows, modest valuation uplift, and reduced OFS, the IPO structure signals confidence both from promoters and existing shareholders.

But the road ahead carries challenges: competition is fierce, profitability is not yet steady, and operational risks remain. Investors will weigh these factors carefully as Meesho enters the public markets with one of the most closely observed listings of the year.

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