Meesho shares in focus after losses mount but management hopeful of improvement

Shares of newly-listed e-commerce company Meesho Ltd. are expected to be in focus on Sunday, February 1, after the company reported its first quarterly performance since listing.

For the quarter, Meesho's EBITDA loss and net loss widened sharply, which the company attributed to lower contribution margins and accelerated investments.

Net merchandise value rose 26% YoY to ₹10,995 crore, while operating revenue increased 31% YoY to ₹3,517 crore.

However, net loss jumped nearly 13 times to ₹491 crore as costs rose much faster than margins, driven largely by higher logistics expenses and growth-related spending.

Contribution margins continued to decline, falling from 4.4% in Q1FY26 to 3.3% in Q2FY26 and further to 2.3% in Q3FY26.

The company said its north star metric remains cash flow, with free cash flow over the last 12 months standing at ₹56 crore.

Meesho expects a major improvement in adjusted EBITDA margins over the next two quarters, driven by logistics cost recovery and operating leverage.

The business was also impacted by a festive season shift, with Q2 and Q3 combined delivering 37% growth in net merchandise value.

Brokerage firm Morgan Stanley has maintained an 'Equalweight' rating on Meesho, with a price target of ₹174.

The brokerage said that Meesho absorbed higher logistics costs, which it sees as temporary, while prioritising market expansion. This strategy led to a positive surprise in ATU, NMV and revenue growth.

However, Morgan Stanley said its FY26E adjusted EBITDA loss estimates have increased post Q3, even as its medium-term forecasts remain largely unchanged.

Ahead of the company's IPO, CEO Vidit Aatrey had said that being a public company does not change what Meesho optimises for, reiterating the company's focus on growth.

Meesho had made a strong market debut on December 10, listing at a premium to the issue price and ending its first trading session 53% higher.

The ₹5,000 crore-plus IPO saw robust demand, with the issue subscribed 79 times overall. The retail portion was subscribed over 19 times, while the qualified institutional buyers' segment saw subscriptions of 120 times.

Of the five analysts tracking the stock, two have a 'Buy' rating, two recommend 'Hold', and one has a 'Sell'.

Shares of Meesho Ltd. ended 2.87% higher on Friday at ₹173, compared with the issue price of ₹111. The stock is currently trading about 32% below its post-listing high of ₹254.65.