Meesho shares can rally to Rs 240? Why Motilal Oswal initiated coverage on the platform stock

Motilal Oswal has initiated coverage with a ‘Buy’ rating on e-commerce platform Meesho, with a target price of Rs 240. The brokerage believes that the company can generate free cash flow starting FY27 and can reach over 4% of net merchandise value (NMV) by FY31.

The brokerage stated that Meesho’s valuations are highly sensitive to NMV growth and contribution margin expansion. At the current market price, the stock is pricing in 25% NMV CAGR over FY26-31, similar to the brokerage’s estimates, and a 6.7% contribution margin (CM) by FY31.

Meesho’s asset-light business model

Meesho’s business model is considered asset-light, with little capex, as per the brokerage’s report. Unlike other internet platforms and offline retailers, the company does not own any inventory or physical infrastructure such as warehouses or storefronts.


The bullish call is premised on 30x FY31E adj. marketplace EBITDA, discounted back to Sep’28E. This implies ~1.4x FY28E EV/NMV, ~10% premium to Eternal’s FY28 EV/NMV. The brokerage believes that a premium could be justified, given the truly asset-light nature of Meesho’s business model.

Brokerage valuations

Motilal Oswal has built in 25% NMV CAGR over the next five financial years i.e. FY26-31 for Meesho, with Profit after tax likely to break even by FY28-exit. The brokerage expects ~660bp adjusted marketplace EBITDA margin expansion over FY26-31, which, along with rising float, is likely to help generate significant free cash flow starting FY27 and reach over 4% of NMV by FY31.

The brokerage expects Meesho to achieve reported EBITDA break-even (after ESOP costs) by FY28-exit, while interest income on its growing cash holdings, zero debt, and limited assets on its books would be the factors driving profit after tax break-even by FY28.

As per the report, further upside risks to the target price could be fueled by stronger NMV growth and/or sharper expansion in CM, while lower NMV growth and/or weaker-than-expected CM expansion could pose downside risks.

Also Read | Meesho expects slower Q2 growth, to raise festive marketing spend

Meesho Q1 Results

The company had reported a narrowed-down loss of Rs 133 crore for the June quarter of FY27, compared with a loss of Rs 289 crore in the same quarter last year, according to its shareholder letter. However, Meesho's marketplace revenue from operations stood at Rs 3,707 crore in Q1FY27, up 48% YoY.

Net merchandise value rose 34% YoY to Rs 11,614 crore from Rs 8,679 crore in the previous quarter of the same financial year. Gross merchandise value increased to Rs 19,054 crore, from Rs 15,134 crore a year earlier.

Also Read | Meesho Q1 Results: Loss narrows to Rs 133 crore; marketplace revenue rises 48%

Meesho Share Price

Shares of Meesho traded flat at Rs 183.25 apiece on the BSE on Tuesday. The company had listed with 46% premium on the BSE and NSE in early December last year, against an issue price of Rs 111. The stock has gained nearly 5% so far this year.

Meesho is now making free cash flow

Meesho is one of the first Indian horizontal e-commerce players to achieve positive free cash flow, which was impeded by a large one-time tax outgo and increased investments to drive growth in FY26.

The company operates a multi-sided marketplace, which connects consumers, sellers, logistics providers, and content creators, creating a self-reinforcing flywheel that drives platform adoption and sustains its cost advantage.

The stock has a long runway for growth and potential margin inflection, according to the brokerage. “Meesho’s asset-light model with negative working capital and improving unit economics makes for a unique combination of a scaled platform business,” the report stated.