Meesho's shares list at 46% premium: Hold or book profit?
What's the story
Meesho, a SoftBank-backed e-commerce platform, has made a stellar debut on the stock market today. The company's shares opened at ₹162.50 on the National Stock Exchange (NSE), a premium of 46.3% over its initial public offering (IPO) price of ₹111 per share. On the Bombay Stock Exchange (BSE), Meesho's shares debuted at ₹161.20, reflecting a premium of 45.2%.
Investor response
Meesho's IPO garners significant investor interest
Meesho's IPO, which was launched at a price band of ₹105-111 per share, received an overwhelming response from investors. The public issue was subscribed 79.02 times on the last day of bidding. The Qualified Institutional Buyers' portion was subscribed 120.18 times, while the Non-Institutional Investors and Retail Individual Investors categories were subscribed 38.15 and 19.04 times respectively.
Fundraising
Meesho's IPO raises over ₹2,439cr from anchor investors
Before the IPO, Meesho raised slightly over ₹2,439 crore from anchor investors. The public issue valued the firm at ₹50,096 crore at the upper end of the price band. It consisted of a fresh issue worth ₹4,250 crore and an offer-for-sale (OFS) of 10.55 crore shares worth ₹1,171 crore. The funds will be used to expand cloud infrastructure, strengthen marketing and brand initiatives, pursue inorganic growth through acquisitions and strategic investments, and for general corporate purposes.
Growth strategy
Business model and future plans
Meesho operates a marketplace connecting small manufacturers with value-conscious customers in India's smaller cities. The company plans to use some of the IPO proceeds to penetrate the smaller towns in one of the world's biggest consumer markets. Despite reporting a loss of ₹3,940 crore on revenue of about ₹9,400 crore for the fiscal year ending March 31, 2025, investors have largely ignored losses at listing-bound start-ups in recent years due to their growth potential.