Meesho share price will be in focus on Friday after foreign brokerage firm Nomura initiated coverage on the stock with a bearish view and expected a downside of more than 28%.
Nomura assigned ‘Reduce' rating to Meesho shares, with a target price of Rs 167 apiece, implying a downside of 28.3% from Thursday's closing price.
The brokerage firm believes Meesho shares trade at a significant premium to other e-commerce platforms. While it likes Meesho's asset-light business model, Nomura believes its current share price leaves little room for error.
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“Third-party logistics (3PL) disruptions and intensifying competition could create headwinds on margin improvement. Meesho trades at a premium to Eternal and Swiggy, despite their higher NMV growth and cash-cow food delivery businesses,” Nomura said.
It believes there is significant room for value commerce platforms to grow due to rising internet penetration, easier modes of payments (UPI and COD), and veracular and voice-based search assisting first-time shoppers.
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The brokerage firm expects Meesho to deliver net merchandise value (NMV) CAGR of ~23% over FY27-30F, driven initially by user acquisitions, followed by higher frequency in the later years.
However, unlike most other platforms, Meesho has an asset-light model where it does not own the inventory or fulfilment assets. Its key USP is its industry-low fulfilment cost leveraging its in-house Valmo platform (with ~18k logistics partners). Meesho's use of Al to improve user experience has been a key driver behind its rapid user growth.
Nomura expects logistics spread and advertising revenue to rise from ~1.5% and ~3% of NMV in Q1FY27 to 2.8% and 5% in FY30, driving adjusted EBITDA margin from -1.2% in 1QFY27 to 2.9% in FY30F.
On Thursday, Meesho share price ended lower at Rs apiece on the BSE.
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