The Meesho IPO is gearing up for its December 3 launch. However, its GMP is already on a high, up well over 40%. The price band of the Rs 5,421 crore issue has been set between Rs 105-111 per share. But is it a subscribe at current levels? Here are some expert views and key highlights of the IPO ahead of its opening.
Meesho IPO: GMP ahead of opening of the issue
Before any IPO hits the market, the GMP becomes a key conversation starter. In Meesho’s case, according to the latest unlisted market data, the stock is trading at a premium of around Rs 48.
This translates roughly around 43% above the upper end of the price band. As of now, this indicates a possible listing price of about Rs 159.
However, it is important to note that GMP is merely an informal indicator. It can change rapidly, depending on mood swings in the market, and does not guarantee the final listing price.
Meesho IPO: Fresh issue unchanged, OFS sees a cut
One of the major talking points is the structure of the offering. The fresh issue portion worth Rs 4,250 crore. However, the offer for sale (OFS) has been significantly reduced. Instead of over 17 crore shares planned earlier, existing investors will now sell about 10.55 crore shares, valuing the OFS at approximately Rs 1,172 crore.
Meesho IPO: Expert take
Meesho operates on a zero-commission model and primarily generates revenue through its logistics services and advertisements. One of the key concerns is that the company has been making losses on net basis even after adjusting for exceptional items. Further, Meesho reported tax expense of Rs 2,487 cr and Rs 72 cr in FY25/1HFY26 respectively on account of business combination.
SBI Securities recommend investors to Subscribe to the issue at the cut-off price for a long-term investment horizon. They pointed out that as “these event are over and there would likely be no exceptional tax expense going forward which should help reduce losses. At the upper price band of Rs 111, Meesho is valued at FY25 price-to-sales ratio of 5.3x on post issue capital. Going forward, Meesho’s path to sustainable profitability will be a key monitorable especially as it continues to make investments in technology, marketing and engineers.”
According to Angel One, “Meesho’s risk profile is driven by high dependence on CoD with elevated return/failed delivery costs, sustained losses despite scale, execution and quality-control challenges across a fragmented seller/logistics ecosystem.”
Angel One too suggested a ‘Subscribe for long-term’. According to them, “at the upper end of the price band, Meesho is valued at roughly Rs 50,096 crore post-issue; the company remains loss-making, so P/E is negative and not a meaningful valuation metric. On operating metrics the IPO price implies an FY25 price-to-sales of ~5.3x, underpinned by a robust GMV run-rate of $6.2 billion and improving marketplace contribution margins.”
In addition to the marketplace, Meesho has expanded into new initiatives, including a cost-effective local logistics network for daily essentials and a digital financial services platform.They are looking at long-term profitability as a key metric at this point.
