Meesho's June quarter (Q1FY27) earnings reinforced confidence in the e-commerce platform's growth trajectory, but brokerages believe the next quarter could be less straightforward.
While analysts largely praised strong revenue growth, improving margins and narrowing losses, they also flagged that higher festive-season customer acquisition spending and a shift in seasonality could weigh on near-term growth before momentum picks up again in the second half of FY27.
ALSO READ: Meesho Q1 Results: Net Loss Halves As Revenue Jumps 48%; Grocery Arm to Get Cash Infusion
Brokerages Decode
UBS
- Maintained Buy with a target price of Rs 210.
- Described the June quarter as "solid results", saying the ecosystem flywheel continues to play out.
- Said topline growth remained strong while margins were ahead of expectations.
- Expects marketing spends to increase ahead of the festive season.
- Believes Q2 could see higher user acquisition spending alongside softer NMV growth, before growth normalises in Q3.
Macquarie
- Maintained Underperform with a target price of Rs 125.
- Said sequential growth moderated while margins improved.
- Continues to like Meesho's market positioning.
- However, believes the current valuation assumes the company's growth flywheel will continue running at full pace over the next five years despite its low per-order unit economics.
Jefferies
- Maintained Buy and raised the target price to Rs 240 from Rs 225.
- Said growth momentum remains strong, while marketplace losses were in line with expectations.
- Noted that management has chosen to pass on cost inflation while maintaining its value proposition.
- Expects Q2 to be softer because of changing seasonality, with Q3 likely to be a bumper quarter.
- Added that the company continues to run multiple experiments while keeping aggregate losses within a defined band.
Meesho Q1 Results
Meesho reported a consolidated net loss of Rs 132.8 crore for the June quarter, nearly halving from Rs 289.3 crore a year earlier, while revenue rose 48.3% year-on-year (YoY) to Rs 3,713 crore.
The company's EBITDA loss narrowed to Rs 224.7 crore from Rs 264.4 crore in the year-ago period. During the quarter, Meesho also announced an investment of Rs 75 crore in its grocery business.
Net Merchandise Value (NMV) grew 34% YoY to Rs 11,614 crore, while marketplace revenue increased 48% to Rs 3,707 crore. Contribution margin expanded 54 basis points sequentially to 4.6% of NMV, while marketplace adjusted EBITDA improved to -1.2% of NMV.
Annual transacting users increased 29% YoY to 274 million, purchase frequency rose to 10.3 transactions per user, and placed orders climbed 29% to 725 million.
Free cash flow over the last 12 months improved to negative Rs 537 crore from negative Rs 633 crore in the previous quarter, while prepaid orders accounted for around 37% of shipped orders during the period.
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