Meesho’s 129% post-IPO rally fizzles as stock slides 35% from peak amid valuation concerns. Buy, sell or hold?

Meesho’s seven-session multibagger rally, which saw the stock surge 129% over its IPO price, has hit a speed bump, with shares slipping 35% from the peak amid valuation concerns, the expiry of the anchor lock-in period, and a senior management reshuffle. Adding to the pressure, cautious commentary from brokerages and analysts is capping any runaway upside in an otherwise weak market environment.

Listed on December 10 at a premium of 46%, Meesho's significant rally led its share price to soar to Rs 254.40, and it has been on a downward trend since then. The stock fell to its low of Rs 153.89 and is now in recovery mode.

Abhinav Tiwari, Research Analyst at Bonanza, attributes the ongoing pressure on Meesho to the IPO lock-in expiry, which has increased the supply of shares in the market and led to selling by early investors and pre-IPO shareholders. In addition, the stock had been trading at elevated valuation multiples compared to other consumer internet and retail peers, prompting profit-taking.


"This lock-in related supply, combined with broader risk-off sentiment toward high valuation new age stocks, has resulted in valuation de-rating, even as the underlying business performance remains largely intact," Tiwari said.

According to market data, up to 110 million shares, or about 2% of the company’s outstanding equity, have become tradeable.

In a recently released note, JM Financial said that the stock price has run up sharply, leaving minimal room for error despite the differentiated business model and the company remaining a key player in the Indian e-commerce space.

JM Financial's stock valuation based on the discounted cash flows (DCF) yields an equity value of Rs 170 per share, implying a 108x/25x FY28/FY30 EV/adjusted EBITDA multiple.

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Brokerage recommendations

JM has initiated coverage on Meesho with a 'Reduce' rating and a DCF-based March 2027 target of Rs 170.

BofA Securities has also initiated coverage on the newly listed company with a 'Neutral' rating and a price target of Rs 190 per share, a 15% upside from current levels.

Meesho's strength

Tiwari, Research Analyst at Bonanza, said that the company's very large user base of 286 million monthly active users, the highest among Indian e-commerce platforms, works well for the company." Out of these, around 234 million users made at least one purchase during the year. This shows that Meesho is not just a browsing app but has strong conversion from users to buyers, especially in smaller towns," he said.

Tiwari highlights a significant improvement in Meesho's logistics efficiency over the last few years." The cost per order reduced from Rs 55 in FY23 to Rs 46 in FY25. This improvement came from building its own logistics platform called Valmo and improving delivery density. At the same time, cash on delivery orders have reduced from more than 90% earlier to about 61% in the first half of FY 2026, which further helps reduce delivery failures and costs," he added.

JM noted that Meesho has perfected the e-commerce digitisation template for Bharat with significant headroom for online penetration in regional and unbranded products. Market-dominating volume at low margins powers a significant competitive advantage, the note said.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)