Meesho IPO review (Not Rated)

•    The company is providing multi sided technology platform driven e-commerce in India.
•    For the last three fiscals, the company posted growth in its top lines, but its bottom line kept sliding southward.
•    The company claims to be the leader and the largest platform on the basis of placed orders and annual transacting users among e-commerce players in India. 
•    Based on its recent financial data, the IPO is priced aggressively at a negative P/E.
•    Only well-informed/cash surplus/risk seekers may park moderate funds for long term, others can stay away.

ABOUT COMPANY:
Meesho Ltd. (ML) is a multi-sided technology platform driving e-commerce in India by bringing together four key stakeholders – consumers, sellers, logistics partners and content creators. Its e-commerce marketplace, that it operates under the brand name Meesho, emerged as India’s largest in terms of number of Placed Orders and Annual Transacting Users among e-commerce players in India in the last twelve months period ended September 30, 2025, according to the Redseer Report.

ML’s value focused platform is designed to serve all segments of consumers across India by making ecommerce affordable, accessible and engaging. The company is focused on providing ‘Everyday Low Prices’ to consumers. Its technology-first operations, platform scale and efficiency offer low cost order fulfilment to sellers on Meesho. This, along with a zero commission model for sellers enables it to reduce the average cost charged to sellers and provide a wide assortment of products ranging from low cost unbranded products, regional brands and national brands at affordable prices on Meesho. Its artificial intelligence/machine learning (“AI/ML”) led algorithms are designed to deliver a personalized, discovery led shopping experience to consumers similar to an offline window shopping experience, making online shopping easy and engaging for consumers.

Through a combination of the above capabilities and inherent benefits of a pure-play marketplace model, the company has been able to attract a large base of consumers. Technology forms the backbone of its platform enabling e-commerce transactions at population scale across India. ML’s modular technology architecture orchestrates interactions across stakeholders enabling reliability, scalability and efficiency on its platform. Every interaction between its stakeholders on its platform generates rich data inputs, which are continuously fed into AI/ML models. These models power a suite of tech backed capabilities such as hyper-personalized recommendations, dynamic pricing of services, automated cataloguing, transaction risk management and prevention, and logistics optimization. The company monetizes its platform through services that are provided to sellers on Meesho such as order
fulfilment, advertising and data insights. 

Further, it does not charge sellers any commission and do not charge any platform fee to consumers on Meesho. Its platform scale and ecosystem integration also enable it to launch and scale New Initiatives such as (i) low cost local logistics network for daily essentials and (ii) a financial services platform where regulated partners offer financial services tailored to its stakeholders, further strengthening platform stickiness and addressable market. The company therefore operate in two business segments – Marketplace and New Initiatives. As of September 30, 2025, it had 2082 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route combo IPO worth Rs. 5421.2 cr. (approx. 488396722 equity shares of Re. 1 each at the upper cap). The issue comprises of fresh equity issue worth Rs. 4250.00 cr. (approx. 382882883 shares at the upper cap) and an Offer for Sale (OFS) of 105513839 equity shares (worth Rs. 1171.20 cr. at the upper cap). The company has announced a price band of Rs. 105 – Rs. 111 per equity shares of Re. 1 each. The issue opens for subscription on December 03, 2025, and will close on December 05, 2025. The minimum application to be made is for 135 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 10.82% of the post-IPO paid-up equity capital. From the net proceeds of the fresh equity issue, the company will utilize Rs. 1390.00 cr. for investment for cloud infrastructure in MTPL – a subsidiary, Rs. 480.00 cr. for payment of salaries, Rs. 1020.00 cr. for investment in MTPL for expenses towards marketing and brand initiatives and the rest for inorganic growth as well as general corporate purposes.

The five Book Running Lead Managers (BRLMs) to this issue are Kotak Mahindra Capital Co. Ltd., J. P. Morgan India Pvt. Ltd., Morgan Stanley India Co. Pvt. Ltd., Axis Capital Ltd., and Citigroup Global Markets India Pvt. Ltd., while KFin Technologies Ltd., is the registrar to the issue. Kotak Securities Ltd. is a syndicate member.

Having issued initial equity shares at par, the company has issued/converted further equity shares in the price range of Rs. 15 – Rs.  3755.00 per share (based on FV of Re. 1), between October 2017, and November 2025. It has also issued bonus shares in the ratio of 47.2509 for 1 in June 2025. The average cost of acquisition of shares by the promoters/selling stakeholders Rs. 0.02, Rs. 0.06, Rs. 0.43, Rs. 0.51, Rs. 1.02, Rs. 2.22, Rs. 3.04, Rs. 4.29, Rs. 8.28, Rs. 17.99, Rs. 46.81, Rs. 82.43 per share.

Post-IPO, its current paid-up equity capital of Rs. 413.02 cr. will stand enhanced to Rs. 451.31 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 50095.75 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit/ - (loss), of Rs. 5897.69 cr. / Rs. – (1671.90) cr. (FY23), Rs. 7859.24 cr. / Rs. – (327.64) cr. (FY24), and Rs. 9900.90 cr. / Rs. – (3941.71) cr. (FY25). For H1 of FY26 ended on September 30, 2025, it posted a loss of Rs. – (570.60) cr. on a total income of Rs. 5857.69 cr. The company marked steady growth in its top line, but boosted loss from FY24 onwards raises eyebrows and major concerns.

For the last three fiscals, the company has posted an average negative EPS of Rs. – (6.02) and an average negative RoNW of – (141.86) %. The issue is priced at a P/BV of 48.68 based on its NAV of Rs. 2.28 as of September 30, 2025, and at a P/BV of 9.87 based on its post-IPO NAV of Rs. 11.25 per share (at the upper cap).

If we attribute FY26 annualized earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at negative P/E of 53.57.  Based on FY25 earnings also, the P/E stands negative. Thus, the issue appears negatively priced. 

DIVIDEND POLICY:
The company has not declared any dividends for the referred periods of the offer document. It has already adopted a dividend policy in June 2025, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Eternal Ltd., Swiggy Ltd., Brainbees Solutions, FSN E-Commerce, Vishal Mega Mart, Trent Ltd., as its listed peers. They are currently trading at a P/E of 1541.0, NA, NA, 730.0, 86.2, and 93.2 (as of November 28, 2025). However, they are not truly comparable on an apple-to-apple basis. This comparison appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
The five BRLMs associated with the offer have handled 87 pubic issues in the past three fiscals, out of which 17 issues closed below the offer price on the listing date.