Motilal Oswal initiated coverage on Meesho, with a “buy” rating and a price target of ₹240 apiece.
In its “bull” case scenario, Motilal Oswal sees a price target of ₹335 for Meesho, assuming a 27.5% Net Merchandise Value (NMV) CAGR over financial year 2026-2031, primarily driven by accelerated ATU additions and slightly higher ordering frequency.
This, along with strong operating leverage is likely to result in a 760 basis points expansion in Meesho’s adjusted marketplace EBITDA margin to 4.75% by financial year 2031.
Why Is Motilal Oswal Betting On Meesho?
Meesho operates a multi-sided marketplace as it connects consumers, sellers, logistics providers and content creators, creating a self-reinforcing flywheel that drives platform adoption and sustains its cost advantage, the brokerage said.
The company has achieved a vast scale and industry-leading unit economics, while improving affordability through its low-cost logistics, zero seller commissions and reducing onboarding friction for the first-time internet users as well as sellers on its platform.
Motilal Oswal said that unlike traditional retailers and other internet platforms, Meesho’s business model is truly asset-light, requiring limited capex on physical infra or inventory. It also operates on a negative working capital, which provides large float income and enables significant free cash flow generation.
The brokerage expects Meesho to deliver a 25% compound annual growth rate (CAGR) in marketplace net merchandise value (NMV) over FY26-31, driven by customer acquisition and rising platform adoption.
Higher ad monetisation and normalisation in logistics spread should drive 400 bps expansion in contribution margin to 7.5% by FY31, while 255 bps operating leverage should drive adjusted earnings before interest taxes depreciation and amortization (EBITDA) of ₹4,800 crore by FY31 at 3.75% margin, the brokerage added.
Motilal Oswal’s initiation is premised on 30x Meesho’s FY31 estimated adjusted marketplace EBITDA. This implies a 1.4x estimated FY28 enterprise value/NMV, which is a 10% premium to Eternal’s FY28 multiple.
However, the brokerage said it believes a higher multiple could be justified for Meesho, given its truly asset-light model, negative working capital and likely significant free cash flow generation starting FY27 and rising to 4% of NMV by FY31, it added.
Meesho reported its first quarter earnings last week. Its operational performance was strong, revenue growth was robust, while its profitability improved and margins expanded.
Its revenue increased 48% to ₹3,712.8 crore while its net loss narrowed 54% to ₹132.8 crore from ₹289.4 crore in the previous year. Its loss also reduced from ₹166.3 crore sequentially.
Its NMV was up 34% at ₹11,614 crore and its contribution margin continued to improve as it rose 4.6% in the June quarter from 4% in the previous year and 2.3% in the third quarter.
It processed nearly 725 million orders in the June quarter, averaging over 90 orders every second. Meesho attributed part of the growth to AI-led initiatives, including AI-powered cataloguing, demand intelligence and multi-lingual voice agents, which helped annual transacting sellers increase 81% to over 1.04 million from the previous year.
Of the 14 analysts who have coverage on the stock, eight have a “buy” rating, three each have “hold” and “sell” ratings.
Meesho shares were trading 0.8% up at ₹186.79 apiece at 10.40 am on Monday. It trades over 68% more than its issue price of ₹111 apiece and 15% more than its listing price of ₹162.5 apiece. The stock has declined 3.8% in the past month and is up 2.9% this year, so far.
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