Motilal Oswal Financial Services initiated coverage on Meesho Ltd. with a 'buy' rating and a price target of ₹240 per share, indicating an upside of over 30% from their current market price. According to reports from CNBC TV18, The Financial Express, and The Economic Times, this brokerage initiation comes after strong operational performance from the newly listed company. The stock has remained unchanged over the past five trading days and has dropped 4.3% in the last one month, though it has surged 14% in the past six months and increased 9.3% over the last one year. As per NDTV Profit, Motilal Oswal's valuations are highly sensitive to net merchandise value growth and contribution margin expansion, with the stock pricing in approximately 25% NMV CAGR over FY26-31 and 6.7% contribution margin by FY31. The brokerage values Meesho at 30x FY31 estimated adjusted marketplace EBITDA, discounted back to September 2028, implying an enterprise value to net merchandise value multiple of around 1.4x FY28 estimates, representing a roughly 10% premium to Eternal's FY28 valuation multiple. The bullish call is premised on the company's free cash flow generation starting FY27 and potential to reach over 4% of net merchandise value by FY31.
Meesho has established itself as India's largest e-commerce platform by user base and order volume, boasting 274 million Annual Transacting Users (ATUs) and over 2.8 billion orders placed in the last twelve months. According to The Financial Express, the company's value-led proposition is specifically designed for 'Bharat', with 88% of its users originating from Tier 2+ markets. The brokerage highlights that there is still significant market penetration potential in India, with online retail accounting for only 7% of total retail sales in CY24, significantly below markets such as China (34%), the US (17%), and even Indonesia (15%). Despite rapid growth since 2016, India's unique internet user penetration of 50% remains well below the more than 80% penetration in the US and China.
Meesho reported robust first quarter earnings with revenue increasing 48% to ₹3,712.8 crore while its net loss narrowed 54% to ₹132.8 crore from ₹289.4 crore in the previous year. As reported by CNBC TV18, the company's net merchandise value (NMV) was up 34% at ₹11,614 crore and its contribution margin continued to improve, rising 4.6% in the June quarter from 4% in the previous year and 2.3% in the third quarter. The company processed nearly 725 million orders in the June quarter, averaging over 90 orders every second. According to The Economic Times, gross merchandise value increased to ₹19,054 crore from ₹15,134 crore a year earlier. The company operates a multi-sided marketplace that connects consumers, sellers, logistics providers, and content creators, creating a self-reinforcing flywheel that drives platform adoption and sustains its cost advantage. The brokerage believes stronger-than-expected NMV growth and/or sharper expansion in contribution margin could fuel further upside risks to their target price.
Unlike traditional retailers, Meesho operates a truly asset-light business model that requires limited capital expenditure on physical infrastructure or inventory. The company operates on negative working capital (25 days of NMV), providing large float income and enabling significant free cash flow generation. According to The Financial Express, the company utilises a zero-seller-commission model and a low-cost logistics network to reduce onboarding friction. Its in-house logistics arm, Valmo, aggregates fragmented delivery providers to drive fulfilment efficiency and cost leadership, which further reinforces a self-reinforcing flywheel effect for platform adoption. Motilal Oswal expects Meesho to deliver a 25% compound annual growth rate (CAGR) in marketplace net merchandise value over FY26-31, with the platform projected to achieve adjusted EBITDA and net profit break-even by FY28. The brokerage expects the company to reach adjusted EBITDA of ₹4,800 crore by FY31 at 3.75% margin, with interest income on growing cash holdings, zero debt, and limited assets driving net profit break-even by FY28. Over FY26-FY31, Motilal Oswal forecasts adjusted marketplace EBITDA margins to expand by nearly 660 basis points, with FCF expected to exceed 4% of NMV by fiscal 2031.
Beyond logistics, advertising remains the largest immediate monetisation opportunity, currently contributing 3% of NMV against a seller demand of 9%. According to The Financial Express, the report highlights 'Horizon 2' initiatives such as content commerce, which generated over ₹1,200 crore in NMV in H1 FY26, and potential expansion into financial services. As more sellers adopt Meesho's ads platform, the brokerage expects return on ad spend (RoAS) expectations to moderate, leading to better monetisation for Meesho. Increased adoption of Meesho Mall should provide additional tailwinds for contribution margin expansion. Motilal Oswal builds in a 400 bps improvement in contribution margin over FY26-31 to reach 7.5% by FY31, with the company's asset-light model and improving unit economics making for a unique combination of a scaled platform business with long runway for growth. The brokerage expects logistics spreads to normalise over the medium term, with logistics contribution returning to around 2.5% of NMV.
