Shares of the e-commerce firm Meesho gained 12% in the unlisted market after brokerage UBS raised its price target to Rs 260. The upgrade highlights growth in the company's seller network and improvements in advertising revenue. Investors are watching how the firm manages competition and operational costs as it targets long-term profitability.
Meesho saw its unlisted shares climb 12% following a positive outlook from the global brokerage UBS. The brokerage firm raised its target price for the company to Rs 260 per share, up from the previous estimate of Rs 210. This price move comes as investors react to the company’s focus on improving profitability through better logistics efficiency and stronger advertising income.
Scaling and Growth Projections
The company’s recent performance shows a steady rise in its operational scale. According to the data from the brokerage, Meesho’s seller network has grown to 1.04 million, an 81% increase compared to the previous year. The user base has also expanded to 274 million. Looking ahead, the company aims to reach 500 million transacting users, focusing on getting customers to shop more frequently on the platform.
The firm plans to maintain a 25% annual growth rate in its net merchandise value between 2026 and 2031. This ambitious target relies on the company’s ability to attract new customers through organic growth and refined pricing strategies. Management has indicated that the cost to acquire new users is kept low, with an expected payback period of 18 months.
Profitability and Sector Risks
While the growth narrative remains strong, investors in the unlisted space are monitoring the broader e-commerce sector in India. The industry is highly competitive, with established giants like Flipkart and Amazon, as well as several quick-commerce platforms, vying for market share. This competition often leads to intense price wars and high spending on discounts, which can affect profit margins for all players involved.
Furthermore, the e-commerce business faces risks related to regulatory changes and shifting consumer demand. Any change in government policy or a sudden drop in consumer spending could impact the company’s ability to hit its profit targets. Additionally, because these shares are traded in the unlisted market, they generally lack the liquidity and regulatory disclosures seen in publicly listed stocks. This means investors should be prepared for higher price volatility and should evaluate their holdings with a long-term view, as liquidity for exits can be limited compared to companies listed on the NSE or BSE.
Monitorables for Investors
The next important phase for the company involves navigating the seasonal nature of Indian e-commerce. As the shopping season shifts from October to November, analysts expect some quarterly fluctuations in financial performance. Investors may want to keep a close eye on the company's ability to lower logistics costs, increase ad monetization, and maintain its target growth rates despite the competitive pressure. Future updates on net merchandise value projections and progress toward EBITDA targets will be key indicators of whether the company is successfully managing its path to profitability.