SoftBank-backed e-commerce firm Meesho, whose Rs 5,421-crore initial public offering (IPO) opens for bids on December 3, on Friday set the price band at Rs 105–111. The firm will be valued at Rs 50,096 crore at the upper end of the band. Proceeds will be used for technology upgrades, greater AI adoption, marketing and opportunistic inorganic growth.
IPO Use of Proceeds and AI-Driven Value Proposition
Meesho’s value proposition is the “simplicity of products” and it has the “highest user rate among e-commerce apps,” the company said. It is using “artificial intelligence (AI) to solve India-specific problems in areas including product delivery, voice search and image search”.
While its logistics division is profitable, the advertising section has higher margins. The firm’s price to earnings (P/E) multiples are not available since it is yet to make profits.
The issuance opens for anchor investor bids on December 2 and will likely list on the bourses on December 10. The IPO is being led by Kotak Mahindra, JP Morgan, Morgan Stanley, Axis and Citi.
Innovative Advertising Model and Content Commerce Focus
Explaining its approach to advertising, the company said it has moved away from traditional ad metrics like cost-per-click or cost-per-impression, which often have little correlation with business outcomes. Instead, Meesho lets sellers decide the minimum return on investment they want from their ad spend. “If a seller says it has Rs 100 to spend and want a 10x return, we’ll only use that money if we can generate incremental sales of Rs 1,000 through the platform.”
The management said AI algorithms create a unique “affluence score” for each customer based on behavioral signals, including browsing patterns, product ratings, purchase and return history. “When a customer opens the app, our system scans 15 crore active product listings in real time to find the 20 most relevant items.”
“Entertainment is moving to short video, and people are increasingly relying on influencer recommendations,” the founders said. This trend prompted them to build their own content commerce platform, which has since seen rapid growth. A big focus for us now is making our supply chain more efficient so that these purchases work seamlessly,” they said.
Along with promoters – Vidit Aatrey and Sanjeev Kumar –, Elevation Capital, Peak XV, Venture Highways, Golden Summit, Y Combinator, Sarin Family, Crimsn Holdings, Titan Patriot Fund and Gemini Investments are offering their shares in the IPO. Some of the VCs are gaining as much as 100 times profits on their investments.