Whalesbook
JP Morgan's Bullish Call Sparks Rally
Meesho shares surged about 12% on April 30, 2026, trading near ₹193.50. This jump was largely driven by JP Morgan initiating coverage with an 'Overweight' rating and setting a ₹215 price target. This target suggests over a 20% upside from the previous day's close of ₹172.68. JP Morgan described Meesho as a pioneering platform, calling it a 'discovery-led marketplace' similar to an advertising network with strong logistics, built for India's retail challenges. The 'Overweight' rating signals strong institutional belief in Meesho's strategy and future.
Growth Projections vs. Market Realities
JP Morgan forecasts Meesho's EBITDA to grow at a compound annual rate (CAGR) of 140% from fiscal years 2028 to 2030. This is much faster than the 70% average growth expected for its internet peers. The valuation uses a multiple of 35 times estimated FY30 earnings before interest, taxes, depreciation, and amortization (EBITDA), discounted to FY28. JP Morgan also expects Meesho's Net Merchandise Value (NMV) growth to outpace user growth, driven by its advertising business which is currently earning only 1.8% in fees, compared to 3.7% globally. However, this optimism faces tough competition from Flipkart (estimated 40-45% market share) and Amazon India (30-32%). While India's e-commerce market is set to grow significantly, Meesho's challenge is to gain share and achieve sustainable profits, especially with its focus on high volume, low-value orders through its Valmo logistics network.
Risks: Margins and Logistics
Despite the positive analyst view, significant risks remain. Meesho has a history of large net losses, with a Q3 FY26 net loss climbing 13-fold year-on-year to ₹491 crore, partly due to expanding its Valmo logistics and customer acquisition costs. Although a recent quarter showed a profit of ₹733.53 crore, past performance includes a negative P/E ratio, negative ROE (-264% in FY25), and negative ROCE (-73.96%), indicating a difficult path to consistent profitability. JP Morgan sees recent dips in logistics costs as temporary and expects recovery by FY27, with Valmo handling 62% of orders. However, running a vast logistics network in India involves complex and volatile costs. Profitably delivering low-value items demands constant efficiency, and higher fulfillment or return costs could hurt margins. Achieving aggressive growth also depends on boosting advertising revenue and expanding EBITDA margins to 4% by FY31 from an estimated -3% in FY26, a tough challenge for value-focused e-commerce. The company's low promoter holding of 16.57% is also a point to watch.
Analyst Views and Future Outlook
Meesho's strategy relies on increasing its Net Merchandise Value (NMV) and using its advertising and logistics strengths. JP Morgan's positive view is based on expectations of quicker free cash flow recovery than EBITDA, thanks to better unit economics. Other analysts share some optimism: Axis Capital initiated coverage with a 'Buy' rating and a ₹195 target, noting Meesho's potential in smaller cities and its growing ad revenue. However, BofA Securities is more cautious, rating it 'Neutral' with a ₹190 target. Investors will closely watch how Meesho performs in expanding its margins and competes in the crowded market while taking advantage of India's growing, yet fragmented, e-commerce sector.