MEESHO IPO Day 2: Bids EXPLODE Over 3x, Retail Investors Lead The Charge! Are You In?

Meesho IPO Captures Investor Attention

The initial public offering (IPO) of e-commerce platform Meesho has continued to garner significant investor interest, successfully surpassing 3 times its offer size by the second day of bidding on December 4. This strong demand highlights the market's appetite for new listings in the e-commerce sector.

Subscription Surge

By 11 am on December 4, the Rs 5,421-crore IPO from the SoftBank-backed company had received bids for approximately 83.97 crore shares, far exceeding the available offer size of 27.79 crore shares. Retail investors have been the most aggressive, subscribing their reserved portion over 5 times (534 percent). Non-Institutional Investors (NII) followed closely, subscribing their quota nearly 3 times (323 percent), while Qualified Institutional Buyers (QIB) booked their portion more than 2 times (213 percent).

IPO Details and Valuation

The e-commerce platform aims to raise Rs 5,421 crore through its maiden public issue, comprising a fresh issue of shares worth Rs 4,250 crore and an offer for sale (OFS) of 10.55 crore shares by existing shareholders. The company has fixed its price band at Rs 105-111 per share. At the upper end of this band, the business is valued at approximately Rs 50,096 crore. Investors can bid for a minimum of 135 shares, requiring an investment of Rs 14,985 at the upper price band. The IPO is open for public bidding from December 3 to December 5, with share allotment expected by December 8 and listing on BSE and NSE on December 10.

Grey Market Premium (GMP) Signals Strong Listing

Ahead of its official listing, Meesho's unlisted shares were trading with a significant grey market premium (GMP). Data from Investorgain indicated a GMP of 40.54 percent over the IPO price, while IPO Watch reported 41.44 percent. Although the GMP has seen a slight decrease from previous days, it still suggests strong market sentiment and expectations for a positive debut on the stock exchanges.

Analyst Opinions Divided

Experts offer varied perspectives on the Meesho IPO. Abhinav Tiwari, Research Analyst at Bonanza, expressed caution, citing weaker fundamentals despite significant transaction volumes. He pointed to adjusted EBITDA losses of Rs 5,518 crore in H1 FY26, deteriorating contribution margins, and intense competition from players like Amazon and Flipkart. He noted that while free cash flows have turned positive recently, sustainable profitability remains uncertain, making it suitable mainly for long-term investors with a high-risk appetite.

Conversely, Ravi Singh, Chief Research Officer at Master Capital Services, highlighted Meesho's strong cash-flow discipline and steady growth, driven by its penetration into underserved markets. He emphasized that Meesho caters to first-time online buyers in smaller towns who are price-sensitive and value selection, representing a distinct growth segment. Singh views this IPO as a "long-term execution story" rather than a quick-margin business.

Angel One has assigned a 'Subscribe for long term' rating. While acknowledging the company remains loss-making, they noted a FY25 price-to-sales ratio of approximately 5.3x, supported by a robust GMV run-rate and improving marketplace contribution margins. They also reiterated that the offering is best suited for investors with a high risk appetite seeking long-term growth.

Impact

• Market Sentiment: The strong subscription numbers and high GMP could boost investor confidence in the Indian IPO market, potentially encouraging more upcoming listings.
• Company Growth: A successful IPO will provide Meesho with substantial capital to fuel its expansion, technological advancements, and marketing efforts, potentially strengthening its competitive position.
• Investor Returns: Investors who successfully subscribe to the IPO may see gains on listing day, depending on market performance and investor demand. However, the long-term returns will hinge on Meesho's ability to achieve sustainable profitability.
• E-commerce Sector: Increased competition and innovation are likely as Meesho strengthens its market presence, benefiting consumers through better pricing and wider choices.
• Impact Rating: 8/10

Difficult Terms Explained

• IPO (Initial Public Offering): The process by which a private company offers its shares to the public for the first time, becoming a publicly traded company.
• OFS (Offer for Sale): Existing shareholders sell a portion of their shares in the company during the IPO, rather than the company issuing new shares.
• GMP (Grey Market Premium): The premium at which an IPO's unlisted shares trade in the grey market before listing. It is an unofficial indicator of potential listing gains.
• Subscription: The process where investors place bids for shares offered in an IPO. When subscriptions exceed the offer size, it is considered oversubscribed.
• Retail Investors: Individual investors who apply for shares up to a certain value limit (typically Rs 2 lakhs in India).
• NII (Non-Institutional Investors): Investors who are not Qualified Institutional Buyers (QIBs) and are typically high-net-worth individuals or entities applying for shares above the retail limit.
• QIB (Qualified Institutional Buyers): Large institutional investors like mutual funds, foreign institutional investors, and banks that invest significant amounts.
• Price Band: The range within which investors can bid for shares in an IPO.
• Valuation: The estimated worth of a company, often calculated using metrics like market capitalization.
• Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company's operating performance, adjusted for certain non-operational items.
• Free Cash Flows: The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.
• Contribution Margins: The revenue remaining after deducting variable costs, used to cover fixed costs and generate profit.
• GMV (Gross Merchandise Value): The total value of merchandise sold over a given period, before deducting fees, commissions, taxes, etc. It represents the total sales volume.