CLSA sees 29% downside in Meesho despite a 19% YTD rally. Buy, sell or hold?

Meesho shares have gained nearly 19% so far in 2026, but CLSA believes the stock’s valuation already reflects overly optimistic expectations for advertising revenue, order growth and logistics savings.

The company's shares have gained 18.76% year to date, outperforming the Nifty 500, which has declined 3.90% over the same period. Despite the rally, CLSA maintained its Underperform rating and target price of Rs 150. The target implies a 29% downside from its previous close of Rs 210.30.

CLSA said, “Investor discussions around Meesho were largely focused on three potential growth drivers: advertising monetisation, higher order frequency and savings from latent logistics capacity. However, the brokerage believes the market is assigning a higher probability of success to these drivers than warranted.”


Investors are factoring in advertising revenue equivalent to about 5% of net merchandise value by FY30, compared with CLSA’s estimate of 3.9%. The brokerage said this expectation could be difficult to achieve because Meesho already operates at a take rate of 17.8%, compared with 5.1% for Chinese ecommerce company PDD.

Meesho’s sellers also generate only about one-tenth of the merchandise value generated by an average PDD seller, while its seller base is about 5% of PDD’s. According to CLSA, weaker seller-level economics could restrict advertising budgets and make it harder for Meesho to scale ad revenue.

Order frequency is another area where investors expect stronger growth. Meesho’s annual order frequency stood at 10.1 in FY26, and CLSA expects it to rise to 13.4 by FY29 and about 17 by FY32.

A significant increase beyond these estimates would require Meesho to expand into categories such as fast-moving consumer goods and daily essentials, CLSA said. This could require a more localised supply chain and faster deliveries, increasing operational complexity and potentially weakening the company’s asset-light model.

The brokerage also questioned whether logistics capacity would remain readily available as Meesho grows. The company accounts for about 39% of India’s ecommerce shipments, up from around 3% five years ago. As more volumes shift to Meesho’s Valmo logistics network, third-party partners may have less incentive to invest in additional infrastructure, potentially creating capacity constraints.

CLSA expects Meesho to remain loss-making through FY27, with a projected net loss of Rs 357 crore. It forecasts a profit of Rs 651 crore in FY28 and Rs 1,483 crore in FY29. The stock trades at about 149 times CLSA’s estimated FY28 earnings and 66 times FY29 earnings.

The Rs 150 target is an equal-weighted blend of CLSA’s relative-valuation estimate of Rs 172 and discounted cash-flow valuation of Rs 128. Faster advertising growth, stronger order frequency and greater logistics efficiencies remain key upside risks to the brokerage’s cautious view.

Disclaimer: This article has been written by Somanjali Das, who is not a SEBI-registered Research Analyst or an Investment Adviser. Somanjali Das and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The EconomicTimes Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment.
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