Meesho IPO: Meesho ticks a few boxes, profit not one of them yet

ET Intelligence Group: Meesho, an e-commerce platform, plans to raise ₹4,250 crore through a fresh issue for investment in cloud infrastructure and capital expenditure. It will also raise ₹1,171.2 crore through an offer for sale. The company plans to spend ₹480 crore or over 11% of the fresh IPO proceeds to pay salaries of employees hired by its subsidiary which undertakes technology development. The promoter group’s stake will fall to 16.3% after the IPO from 18.5%.

Meesho generates revenue from services like order fulfilment, ads, and insights. The company’s loss has increased in FY25 from FY23, but it has reduced in the six months to September. It is still generating losses on Ebitda level. Given these factors, investors may wait to see stability in financials after the listing.

Business Incorporated in 2015, Meesho operates an e-commerce marketplace enabling consumers to access a wide range of affordable products while offering sellers a low-cost platform to grow their businesses. Redseer, a consulting firm, ranks Meesho as India’s largest e-commerce marketplace by order volume and annual transacting users for the 12 months ended September 2025. Meesho earns a significant part of its revenue from seller ads. sellers can pay for higher visibility, promoted listings, and performance-based placements, which drives consistent and scalable monetisation. Its recently launched logistics arm, Valmo, integrates third-party providers for first and last-mile delivery, sorting, and trucking to enable nationwide order fulfillment. It charges sellers a shipping fee on each order and earns a margin between the charged fee and its optimised delivery cost. Annual transacting users and annual transacting sellers increased to 234.2 million and 706,471 respectively in September 2025 from 136.4 million and 449,966 sellers in FY23, respectively.

Financials Revenue grew by 28% annually to ₹9,389.9 crore between FY23 and FY25. It reported an operating loss (Ebitda loss) of ₹1,413.9 crore in FY25 compared with an Ebitda loss of ₹1,640.5 crore in FY23. Meesho’s net loss widened to ₹3,941.7 crore in FY25 from ₹1,671.9 crore in FY23. Gross merchandise value and Net merchandise value increased to ₹503.1 crore and ₹299.9 crore in FY25 from ₹344.9 crore and ₹192.3 crore in FY23, respectively. In the six months to September 2025, revenue grew 29.4% year-on-year to ₹5,577.5 crore while net loss reduced to ₹700.7 crore from ₹2,512.9 crore by similar comparison.

ValuationThe company is yet to report profit, so price-to-earnings multiple will not be appropriate. Considering the post-IPO equity and revenue for FY25, the price-sales (P/S) multiple is six. It does not have a direct publicly listed peer. Some of the other e-commerce companies have P/S between two and 14, which includes companies such as Brainbees Solutions, Vishal Mega Mart, Swiggy, FSN E-Commerce Ventures and Eternal.