Meesho shares up 86% since IPO: Sell or hold?
What's the story
Meesho's stock price surged by nearly 14% to hit an intraday high of ₹207.67 on Wednesday. The spike came after global financial services company UBS initiated coverage on the stock with a "Buy" rating, citing multiple growth levers. The latest rally has pushed Meesho's shares up by 86% from its issue price of ₹111, taking the company's market capitalization to over ₹90,000 crore.
Target projection
UBS sets target price of ₹220 for Meesho
UBS has set a target price of ₹220 for Meesho's shares. The brokerage firm praised Meesho's asset-light and cash-positive business model, which is different from many other internet-led businesses. It also predicted a strong 30% compound annual growth rate (CAGR) in Net Merchandise Value (NMV) over FY25-30E, with contribution margins and adjusted EBITDA margins expected to improve by FY30E.
Growth forecast
Meesho's growth driven by user expansion
UBS expects Meesho's NMV growth to be driven by a sharp increase in annual transacting users from 199 million to 518 million. The firm also predicts an increase in annual ordering frequency from 9.2 to 14.7, even as average order values are likely to moderate from ₹274 to ₹233 due to the company's efforts toward passing on logistics efficiencies across the ecosystem.
Market debut
Meesho's successful stock market debut and IPO performance
Meesho made its stock market debut on December 10, listing at a premium to its issue price and closing its first session 53% above the ₹111 IPO price. The company's three-day IPO, worth over ₹5,000 crore, was oversubscribed by both institutional and retail investors. The issue was subscribed 79 times overall with the retail portion being subscribed more than 19 times.
Billionaire status
Meesho's co-founder Vidit Aatrey enters billionaire club
Meesho's co-founder and CEO Vidit Aatrey has entered the billionaire club as his net worth now stands at ₹9,142.87 crore or $1.005 billion. This comes after the e-commerce company's shares continued their post-listing surge. With an 11.1% stake in the company, Aatrey holds 47.25 crore shares of Meesho which has contributed to his newfound billionaire status.