Brokerage flags AOV decline and weak per-order economics as structural profit barriers despite 45% order volume surge in FY26
The Bear Call
Global brokerage Macquarie on Friday initiated coverage on Meesho (NSE: MEESHO) with an ‘Underperform’ rating and a target price of Rs 125 per share, implying a downside of nearly 25% from the stock’s current trading range of Rs 166–169 on NSE. The call makes Macquarie the most bearish institutional voice on the newly listed e-commerce platform, sitting well outside a broader analyst consensus that remains constructive on the stock.
Macquarie’s core thesis: strong order volume growth is being neutralised by declining average order values, leaving per-order economics too thin to support a credible path to profitability at current valuations.
Why Macquarie Is Worried: The AOV Problem
The numbers are already moving in the direction Macquarie fears. Meesho’s full-year FY26 average order value (AOV) came in at Rs 265, down 3% from Rs 274 in FY25. This isn’t a forecast anymore. It’s happened.
Key FY26 operating metrics vs FY25:
| Metric | FY25 | FY26 | Change |
|---|---|---|---|
| Average Order Value (AOV) | Rs 274 | Rs 265 | â–¼ 3% YoY |
| Annual Transacting Users (ATU) | 199 million | 264 million | â–² 33% YoY |
| Placed Orders | 1,834 million | 2,668 million | â–² 45% YoY |
| Net Merchandise Value (NMV) | Rs 29,988 Cr | Rs 41,560 Cr | â–² 39% YoY |
| Order Frequency (LTM) | 9.23x | 10.1x | â–² 9% YoY |
The platform is scaling. But each order is worth less. And at Meesho’s thin take rates, even a Rs 9 drop in AOV per order matters at 2.6 billion orders a year.
Financials: Losses Narrowing, But Not Fast Enough
Meesho’s Q4 FY26 and full-year results, announced May 6, 2026, showed continued progress on losses, but the bottom line remains firmly in the red.
Meesho P&L snapshot:
| Period | Revenue (Ops) | Net Loss | YoY Change (Loss) |
|---|---|---|---|
| Q4 FY25 | Rs 2,399.97 Cr | Rs 1,391.38 Cr | — |
| Q4 FY26 | Rs 3,531.21 Cr | Rs 166.35 Cr | â–¼ 88% improvement |
| FY25 Full Year | Rs 9,389.90 Cr | Rs 3,941.71 Cr | — |
| FY26 Full Year | Rs 12,626.35 Cr | Rs 1,357.74 Cr | â–¼ 66% improvement |
Revenue growth at 34.5% YoY for FY26 is solid. The loss reduction looks dramatic, but most of FY25’s losses included one-time exceptional items from the IPO restructuring. Strip those out, and the core operational loss trajectory is less impressive than the headline numbers suggest. Contribution margin in Q4 FY26 recovered to 4.0% of NMV, up from distressed levels, but adjusted EBITDA (marketplace) is still negative at -1.7% of NMV.
The Valuation Gap Macquarie Is Targeting
At ~Rs 167, Meesho’s market cap sits around Rs 76,868 crore. The stock was listed at Rs 162.50 on NSE on December 10, 2025, a 46.4% premium over its IPO price of Rs 111, and hit a 52-week high of Rs 254.40 before sliding back. It is now trading 34% below that peak.
Where analysts stand (as of May–June 2026):
| Broker | Rating | Target Price |
|---|---|---|
| Macquarie | Underperform | Rs 125 |
| UBS | Buy | Rs 220 |
| Analyst Consensus (10 brokers) | Buy | Rs 204.10 |
| 52-Week Low | — | Rs 125.56 |
| 52-Week High | — | Rs 254.40 |
Macquarie’s Rs 125 target almost exactly coincides with the stock’s 52-week floor of Rs 125.56, meaning the brokerage is pricing in a scenario where the post-IPO support level fully gives way.
The Hidden Risk: Cash-on-Delivery Still Dominates
What doesn’t get enough attention in Meesho coverage is its payment mix. CoD accounted for 72% of total shipped orders in H1 FY26 (period ending September 2025) — down from 88.71% in FY23, but still the dominant mode.
CoD trend across years:
| Period | Cash-on-Delivery Share |
|---|---|
| FY23 | 88.71% |
| FY24 | 85.39% |
| FY25 | 76.95% |
| H1 FY26 | 72.00% |
CoD orders carry higher return rates, lower delivery success, and additional cash-handling costs compared to prepaid. At 72% of a 2.6-billion-order annual run rate, this is a structural drag on per-order profitability that every bull-case model has to account for. The improvement is real, but the absolute level remains the highest among major Indian e-commerce platforms.
Bull vs Bear: What Both Sides Are Watching
- Bulls point to NMV CAGR of 39% in FY26, ATU growth of 33%, and the fact that free cash flow turned positive at Rs 1,032 crore in FY25 (including interest income), with fulfilment costs per order falling from Rs 50 in FY23 to Rs 43 in FY25. Meesho Mall grew 82% YoY in Q4 FY26. The platform is also India’s largest e-commerce platform by annual transacting users.
- Bears (led by Macquarie) point to AOV already declining in FY26 actuals, contribution margin still below 5% of NMV, adjusted EBITDA still negative, and a valuation of ~6.6–7.8x P/S on FY25 revenue with no clear near-term path to positive EBITDA.
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FAQ
Q: What is Macquarie’s target price for Meesho and what downside does it imply?
Macquarie has set a target of Rs 125 per share, a ~25% downside from the current price of ~Rs 167 on NSE. This is the lowest institutional target on Meesho, against a consensus target of Rs 204.10 across 10 analysts.
Q: What was Meesho’s revenue and net loss in Q4 FY26?
Revenue from operations rose 47.14% YoY to Rs 3,531.21 crore in Q4 FY26. Net loss narrowed sharply to Rs 166.35 crore from Rs 1,391.38 crore in Q4 FY25. Full-year FY26 net loss stood at Rs 1,357.74 crore versus Rs 3,941.71 crore in FY25.
Q: Is Meesho stock a buy or sell according to analysts?
The broader analyst consensus is Buy, with 5 of 10 analysts rating it a Buy and the average 12-month target at Rs 204.10. Macquarie is the outlier at Underperform with a Rs 125 target. UBS holds the most bullish view at Rs 220.
Meesho’s Q1 FY27 results will be the next key data point. If AOV slides further below Rs 265, or contribution margin fails to sustain its Q4 FY26 recovery to 4.0% of NMV, Macquarie’s bear case gets a lot harder for bulls to dismiss.
