Meesho Target Share Price Today: Meesho shares were buzzing in trade on Tuesday, with the scrip rallying as much as 7.25% to hit an intraday high of Rs 234.95 per share, moving closer to its all-time high of Rs 254.65.
At 11:10 am, Meesho shares were trading 7.05% higher at Rs 234.50 per share. In comparison, the BSE Sensex was trading 0.17% lower at 74,715 levels.
The sharp uptick in the stock came after UBS raised its target price on Meesho to Rs 260 from Rs 210, while maintaining its 'Buy' rating on the stock.
UBS On Meesho: Margins Evolving Faster Than Expected
UBS analysts Navin Killa, Ajay Raj Choudhary and Neil John said growth remains in the 30% range, while margins are improving faster than expected.
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The brokerage raised its price target to Rs 260 from Rs 210 on the back of higher medium-term growth estimates and a stronger margin trajectory. While UBS largely retained its FY27 estimates, it raised its FY29-31 NMV estimates by 7-18%.
Contribution profit estimates were also increased by a similar magnitude, while EBITDA estimates for the period were raised by 20-40%.
The higher NMV forecasts reflect the continued platform flywheel, supported by an 81% year-on-year increase in sellers to 1.04 million in Q1 FY27, a 29% increase in buyers to 274 million, and rapid expansion in SKUs and logistics partners.
UBS said the larger increase in EBITDA estimates reflects a stronger medium-term margin trajectory, driven by improving advertising monetisation and logistics economics.
Meesho Margins: Ads, Logistics Key Drivers
UBS sees clear visibility on the drivers of contribution margin improvement, particularly advertising and logistics margins.
Meesho had historically targeted a 2.5% margin on logistics. However, this was reinvested from mid-FY26 amid disruption in the logistics space and higher costs per parcel.
Logistics costs have since started declining, falling from Rs 44 in Q3 FY26 to Rs 42 in Q1 FY27. Management expects the sequential decline to continue, allowing Meesho to rebuild its logistics margin from 1.5% to 2.5% over the next two to three quarters, according to UBS.
Advertising revenue crossed 3% of the business in Q1 FY27. UBS said sellers have indicated willingness to spend 2.5-3 times the current amount, although Meesho is balancing higher advertising revenue against buyer experience and conversion.
Contribution margin improved from 2.3% in Q3 FY26 to 4.6% in Q1 FY27. UBS expects it to reach around 5% by the end of FY27 and 5.6% by the end of FY28.
Meesho NMV Growth: UBS Sees 25% CAGR Over FY26-31
UBS said management remains confident about Meesho's FY27 growth outlook.
The shift in Diwali from October 2025 to November 2026 is expected to result in slower growth in Q2 and faster growth in Q3. However, UBS said low-30% NMV growth remains achievable for FY27.
Meesho expects around 25% NMV CAGR over FY26-31, supported by significant runway for new customer additions and higher purchase frequency.
The company is targeting more than 500 million annual transacting users in the medium term, almost twice the 274 million ATUs reported in Q1 FY27.
UBS noted that ordering frequency among the oldest user cohorts, those on the platform for more than five years, stands at 20 times versus a platform average of 10 times and 6-7 times for new users.
Recently acquired users have also shown strong engagement, with users in the three-plus-year cohorts recording 15 times the frequency. UBS said usage continues to increase across cohorts.
Around 50-55% of new users are organic, while dropout among users who transact three to four times tends to be low, resulting in an 18-month payback period for new-user acquisition.
These assumptions, however, require logistics costs to continue declining and average order values to fall at a mid-single-digit rate annually, allowing new customers and use cases to enter the ecosystem.
Meesho Valuations
UBS values Meesho using a combination of discounted cash flow and multiples. Under the multiples approach, the brokerage applies an unchanged 40x EV/EBITDA multiple to three-year-forward EBITDA, based on the average of FY30 and FY31 estimates, and discounts the valuation back by two years.
"We value Meesho using a combination of DCF and multiples. On the multiples approach, we apply a 40x EV/EBITDA multiple (unchanged) on 3YF EBITDA i.e. average of FY30-31 and discount it back by two years, deriving a PT of Rs260," the brokerage said.
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