Featured News Headlines
Meesho Surges Nearly 95% Since IPO Amid Institutional Interest and UBS Buy Rating
Meesho, the popular Indian e-commerce platform, witnessed a dramatic surge in its share price on December 17, jumping 20% to hit the upper circuit after UBS initiated coverage on the stock with a ‘Buy’ call. The brokerage also set a target price of Rs 220 per share, signaling significant upside potential from current levels.
Meesho’s Price Rally
In morning trading on Wednesday, Meesho shares rose to Rs 216.34 each, the highest level since the company’s strong market debut on December 10. Remarkably, this surge represents an almost 95% gain from its IPO price of Rs 111 per share in just six trading sessions.
The company’s market capitalization now stands at Rs 97,637.08 crore, up from over Rs 73,000 crore at its IPO debut, implying a nearly Rs 25,000 crore increase in market value within less than a week of trading.
UBS Initiates ‘Buy’ Coverage
UBS’s coverage note highlighted Meesho’s unique position in the e-commerce space. The international brokerage set a target price of Rs 220 per share, representing more than 22% upside potential from the stock’s previous close at Rs 180.29.
UBS emphasized that Meesho operates under an asset-light, negative working capital business model, while maintaining positive cash flows. The brokerage expects the company’s net merchandise value (NMV) to grow at a CAGR of 30% between FY25-30, reflecting strong long-term growth prospects.
The report also projected contribution margin and adjusted EBITDA margin to reach 6.8% and 3.2% of NMV by FY30, respectively. Meesho’s expansion is expected to be driven by Active Transacting Users (ATU) increasing from 19.9 crore to 51.8 crore, while order frequency could rise from 9.2x to 14.7x. UBS cautioned that average order value may decline slightly from Rs 274 to Rs 233 due to efficiencies in logistics being passed on to consumers.
Focus on Tier 2 and Tier 3 Cities
UBS highlighted that Meesho’s focus on lower- to middle-income consumers in India’s tier 2 and tier 3 cities provides a robust growth runway. As adoption accelerates among these demographics, the platform is expected to see continued expansion in its core market.
Meesho’s Record-Breaking Market Debut
Meesho’s stock made an impressive debut on December 10, listing at Rs 162.50 per share on NSE, a 46% premium over its IPO price of Rs 111. The IPO, valued at Rs 5,421 crore, was oversubscribed 79 times, reflecting high investor enthusiasm.
Since listing, the stock has continued to perform strongly, currently trading around 32% higher than its initial listing price. The combination of institutional interest and positive analyst coverage has created significant momentum in the early days of trading.
What’s Driving the Surge?
The rapid appreciation in Meesho’s shares can be attributed to several factors. The stock has benefited from strong institutional interest, highlighted by UBS’s Buy recommendation, as well as rapid growth in net merchandise value (NMV), reflecting an expanding and highly engaged user base. Additionally, Meesho’s positive cash flow business model distinguishes it from other tech startups, while its focus on underpenetrated markets, particularly tier 2 and tier 3 cities, has further fueled its user base expansion.
These elements together have fueled a spectacular early rally, pushing the company’s market capitalization closer to Rs 98,000 crore in just under a week of trading.
While the stock has surged since its highly anticipated IPO, analysts will be closely watching user growth metrics, order frequency, and margins as indicators of sustainable performance. UBS’s optimistic forecast and target price of Rs 220 suggest that Meesho could see further upside if the company continues its rapid expansion in India’s e-commerce ecosystem.
For now, Meesho’s performance is a testament to the market’s strong appetite for scalable, asset-light e-commerce platforms, particularly those targeting tier 2 and tier 3 urban consumers.
