Shares of Meesho rallied over 13% intraday after JPMorgan initiated coverage with an “Overweight” rating and a target price of Rs 215, signalling meaningful upside from current levels.
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JPMorgan's bullish stance hinges on Meesho's ability to grow transaction value faster than its user base, driven by rising engagement and frequency rather than just new customer additions. The brokerage expects Meesho's NMV (net merchandise value) to grow at a strong pace, even as user growth moderates. This shift from scale to depth—higher spending per user — could sustain a 23% CAGR through FY31.
Key drivers include increased purchase frequency, expansion into new categories, and the scaling of initiatives like Mall and Content Commerce. Together, these are expected to reduce reliance on pure user growth and strengthen the platform's monetisation engine.
Three Growth Levers
Three levers stand out: increasing the number of paying sellers, improving ad spends per seller, and scaling branded and mall-led advertising formats. Currently, ad revenues as a share of GMV remain well below global benchmarks, offering a long runway for growth.
Additionally, Meesho is beginning to tap into higher-value users through premium offerings. By expanding its assortment beyond value-focused segments into categories like home, kitchen, and beauty, the platform could widen its addressable market and improve margins.
JPMorgan also downplays recent volatility in logistics costs, viewing the pullback as cyclical rather than structural. The brokerage attributes recent margin pressure to one-off factors, including adjustments by third-party logistics providers, and expects recovery as scale efficiencies improve.
Perhaps the most striking part of JPMorgan's thesis is its expectation that free cash flow (FCF) will recover faster than EBITDA. A favourable working capital cycle is expected to drive strong cash generation, with FCF margins projected to turn positive ahead of earnings stabilisation. JPMorgan estimates Meesho could achieve FCF margins of around 1.5% by FY28 and over 3% by FY30, reinforcing the platform's path to sustainable profitability.
The brokerage values Meesho at 35x FY30 EV/EBITDA, translating into its ₹215 target price and implying meaningful upside from current levels.
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