Axis Capital has initiated coverage on Meesho with a ‘Buy’ rating with a target price of ₹195, implying 39 per cent upside from its previous close. The brokerage believes Meesho is well placed to benefit from e-com growth driven by rising tier 2 penetration, leveraging its value play and ‘affordability’ flywheel to drive user growth and order frequency.
Brokerage estimates India’s e-commerce market could grow at a compound annual growth rate (CAGR) of around 20 per cent over the next five years, driven largely by expanding adoption in tier-2 cities and beyond, where affordability remains a key purchase driver.
Market leadership in value commerce
Analysts noted that Meesho, with around 250 million annual transacting users (ATUs), has emerged as India’s largest e-commerce player by user base and is particularly strong in unbranded and long-tail categories.
Its strategy has been to improve affordability by passing on cost efficiencies—especially in logistics—to sellers, enabling them to offer cheaper products to consumers. This, in turn, helps the platform deepen penetration and improve order frequency.
Tier-2+ expansion to power growth
According to Axis Capital, Meesho’s total addressable market could reach around 580 million users by FY30 across urban and rural India, with the platform potentially capturing around 8 per cent of spending in its key categories.
The brokerage highlighted that Mercado Libre and Pinduoduo show continued growth in users and order frequency is possible despite high penetration.
Advertising seen as a key profit lever
Advertising is expected to emerge as an important monetisation driver for Meesho as the platform scales.
With around 9,00,000 sellers on the platform, analysts believe Meesho is well placed to improve ad monetisation because of its strong unbranded assortment, high order frequency, clear attribution for sellers, and discovery-led shopping model.
They estimate advertising revenue could grow from around 3 per cent of net merchandise value (NMV) currently to about 6 per cent by FY30.
Competition seen structurally constrained
Brokerage checks suggest Meesho currently holds a pricing advantage over rivals such as Amazon Bazaar and Shopsy.
According to the analysis, these competing platforms are constrained by seller base, catalogue mix, and fulfilment economics that are inherited from higher average selling price models. On a 19-product comparison basket costing around ₹1,600, Meesho was found to be 31-37 per cent cheaper.
Profitability outlook improves
Analysts expect Meesho’s affordability-led model to support a 29 per cent net merchandise value (NMV) CAGR over FY26 to FY30, while revenue could grow at a CAGR of 25 per cent over the same period.
Adjusted Earnings before interest, tax, depreciation and amortisation (Ebitda) margin is projected to expand to 3.1 per cent by FY30, improving by 620 basis points (bps), driven by operating leverage and better monetisation. The company’s asset-light structure and negative working capital cycle are also seen as supportive of free cash flow generation.
Key risks remain
Analysts caution that risks to the outlook include slower-than-expected growth in annual transacting users and seller additions, logistics costs not declining as anticipated, and weaker-than-expected improvement in ad monetisation.
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