Meesho shares jump 10% as JP Morgan initiates coverage with Rs 215 target price

The US-based brokerage stated that “Meesho is building India’s first discovery-led marketplace that acts as a long tail ad network with embedded logistics for a fragmented retail market”.

JP Morgan expects the company’s net merchandise value (NMV) to scale at a 23% compound annual growth rate (CAGR) over FY26-31 without “heroic” annual transacting user (ATU) targets, driven by rising frequency, falling return-to-origin (RTO) orders and stronger growth in Mall and Content Commerce.

Strong margin expansion ahead

The brokerage sees significant EBITDA margin expansion to 4% by FY31, up from negative 3% in FY26, driven by under-monetized advertising take-rates. “This should drive EBITDA/FCF CAGR of 170/52% over FY28-31 post break-even,” JP Morgan noted in its report.

JP Morgan valued Meesho at 35 times FY30 estimated EV/EBITDA, discounted back to FY28. The brokerage highlighted that this valuation reflects “EBITDA CAGR of 140% over FY28-30E vs internet peers’ average growth of 70% over FY26-28E and 30x EV/EBITDA”.

Live Events

Three levers for advertising growth

Explaining the advertising monetization potential, JP Morgan analysts Ankur Rudra and Bhavik Mehta stated that “advertising take rates have several levers including: 1) the number of paying sellers (JPMe ~60%); 2) monetization per seller of paying sellers (current sellers’ spend <50% of ad budget); and, 3) growth in Mall and branded goods”.

The report emphasized that “Meesho is under-indexed on ad rates at 1.8% of GMV vs. global peers at ~3.7% of GMV”, suggesting substantial room for improvement.

Market leadership and growth trajectory

Meesho has emerged as India’s largest e-commerce player over the twelve months ended June 30, 2025, in terms of the number of placed orders and annual transacting users, according to Redseer data cited in the report.

The company’s annual transacting users increased from 199 million in FY25 to an estimated 265 million in FY26, representing a 33% year-on-year growth. JP Morgan projects ATU to reach 568 million by FY31.

“NMV growth can outperform user growth,” the brokerage noted, adding that “we are skeptical of annual transacting user growth being constrained in the late teens, we think NMV can be sustained at a 23% FY26-31 CAGR, thanks to a combination of rising platform frequency (to over 12x from FY30) and falling RTO”.

Logistics: temporary setback, not structural

Addressing concerns around logistics costs, JP Morgan stated: “We understand the key debate has been on logistics costs pullback, whether it has been a loss of economics or cyclical. We believe the 2Q-3Q drop in logistics monetization was a one-off as a result of 3PL consolidation and should recover in FY27 as Meesho is able to plan volumes better”.

The brokerage expects Valmo, Meesho’s proprietary logistics orchestration platform, to peak out at 65-70%, “which can balance economics with resilience”.

Free cash flow recovery expected

JP Morgan expects free cash flow (FCF) to recover faster than EBITDA due to a negative working capital cycle. “We expect FCF to recover to 1.5% of NMV by FY28 and 3.1% by FY30,” the analysts wrote.

The company has generated positive FCF historically in FY24 and FY25, though it turned negative in FY26 due to strategic investments in logistics and user acquisition.

Key risks to watch

JP Morgan flagged several risks including “slower than expected growth in NMV due to slower smartphone shipments, persistent logistics cost overruns, inability to expand ad take rates, competition from horizontal ecommerce, and labor code risks”.

The brokerage noted rising competition, with Amazon and a leading Indian e-commerce player picking up pace since mid-2025 and outpacing Meesho in monthly downloads growth rate.

For FY28, JP Morgan estimates revenue of Rs 216.36 billion, with adjusted EBITDA of Rs 2.11 billion and adjusted net income of Rs 6.27 billion. The company is expected to achieve adjusted EBITDA breakeven in FY28.