Will Meesho's 60% comeback rally cool or can Q4 serve as a new launchpad?

Shares of Meesho are likely to be in focus today ahead of its Q4 earnings announcement. The stock has staged a sharp rebound, rallying over 60% from its March low of Rs 125.56. Its momentum cooled amid valuation concerns, especially after the scrip surged nearly 129% over its IPO price in just seven sessions. While earnings remain the next key trigger, technical indicators suggest the stock may be overheated again, pointing to a potential near-term pullback.

On Tuesday, Meesho shares ended with cuts of over 6% at Rs 205.

BofA has modelled growth of 37% YoY and 4% QoQ in net merchandise value (NMV) for Meesho. "Between 4Q26 and 1Q27, we expect margin improvement to be front-loaded and model -2.5% EBITDA margin as a percentage of NMV (-4.4% in 3Q). Express business momentum is expected to continue, led by Meesho’s outsourcing and estimated 315 million shipments, leading to 48% YoY express segment revenue growth. We estimate express EBITDA margins to be largely flat at 18.2%. We expect PTL to show 21% YoY growth in seasonally strong 4Q and margins to inch up 76 bps QoQ to 11.8%," the brokerage said.


The brokerage expects Meesho to be EBITDA loss-making for the next few years. Using a 10-year DCF to capture medium-term potential of the value commerce business, it said a steady-state margin is at least 4 to 5 years away. BofA, in its preview note, has suggested a target price of Rs 170.

Dr Ravi Singh, Chief Research Officer at Master Capital Services, said Meesho is on a massive tear, surging roughly 70% from its March lows. Monday's 12% single-day jump was backed by significant trading volumes, showing strong buyer interest, likely driven by a major news catalyst. However, after such a fast rally, the stock is running extremely hot as the RSI indicator is hovering near 79, putting it deep into overbought territory.

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"This means the stock might be running out of steam in the short term. It is also approaching an older resistance zone around the Rs 240 mark," Singh said, suggesting investors and traders wait for fresh positions and trail existing longs with a stop loss at Rs 202.

Listed on December 10 at a premium of 46%, Meesho's significant rally saw its share price soar to Rs 254.40 before declining to a low of Rs 153.89. It is now in recovery mode.

Meesho's underperformance post listing coincided with several developments. One was the company's Q3 earnings, where its consolidated net losses widened 13 times to Rs 491 crore compared to a loss of Rs 37 crore in the year-ago period. The December-listed e-commerce company reported a 32% year-on-year jump in its revenue in Q3FY26 to Rs 3,518 crore versus Rs 2,674 crore in the corresponding quarter of the previous financial year.

Abhinav Tiwari, Research Analyst at Bonanza, told ETMarkets the stock had been trading at elevated valuation multiples compared to other consumer internet and retail peers. He said high valuations in new-age stocks resulted in a valuation de-rating, triggering a sell-off post listing, even as the underlying business performance remained largely intact.

Brokerage JM Financial, in its post-Q3 note, initiated coverage on the stock with a 'Reduce' rating and a DCF-based March 2027 target of Rs 170. 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 volumes at low margins power a significant competitive advantage, the note said.

Tiwari said 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 highlighted 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 FY26, which further helps reduce delivery failures and costs," he added.

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