Meesho: Why Jefferies believes the stock could rally 34% from current levels

Meesho is well placed to benefit from India's rapidly expanding value-commerce market and could deliver a 34% upside from current levels, according to a new initiation report by Jefferies, which has started coverage on the company with a "Buy" rating and a target price of Rs 225.

The brokerage said Meesho has built a distinct position in Indian e-commerce by targeting price-conscious consumers, particularly in smaller cities and towns, through a discovery-led marketplace focused on affordability.

"Meesho is building a scale-led value commerce platform anchored in affordability, discovery and logistics efficiency," Jefferies said in its report. The target price implies a potential upside of about 34% from the stock's last closing price of Rs 167.95.

According to Jefferies, Meesho's business model differs significantly from traditional e-commerce platforms. Rather than focusing on branded products and higher-spending urban consumers, the company caters largely to value-seeking customers in non-metro markets through a low-cost marketplace offering.

The brokerage expects Meesho's net merchandise value (NMV) and revenue to grow at a compound annual rate of about 25% and 27%, respectively, between FY26 and FY30.

Meesho currently serves around 264 million annual transacting users and works with nearly 9.6 lakh sellers. The company processed more than 2.5 billion orders in FY26, underscoring its scale in India's growing online retail market.

A key pillar of the company's strategy is its zero-commission model for sellers. Instead of charging commissions, Meesho generates revenue through logistics services, advertising and seller tools. Jefferies believes this approach has enabled the platform to rapidly onboard merchants, including first-time online sellers, while maintaining competitive prices for consumers.

The brokerage also highlighted Meesho's logistics network and technology investments as important competitive advantages.

The company operates an asset-light logistics model through a mix of its own logistics platform, Valmo, and third-party partners. This helps lower fulfilment costs and improve delivery efficiency, particularly in tier-2 and smaller cities.

Artificial intelligence is increasingly becoming a core part of the business. Jefferies pointed to tools such as PRISM, the company's recommendation engine, Vaani, its voice-based shopping assistant, and GeoIndia LLM, which helps improve address accuracy and logistics efficiency.

The report comes at a time when India's e-commerce market continues to expand rapidly. According to estimates, India's retail market was worth about $978 billion in FY25, but online commerce still accounts for only around 7% of total retail sales. The brokerage expects the Indian e-commerce market to grow more than 20% annually over the next five years.

The biggest opportunity lies outside major cities. While tier-2 and smaller cities currently account for 44% of India's e-commerce market, their share is expected to exceed 50% over the next five years as internet penetration and digital adoption deepen.

Jefferies noted that value-focused e-commerce platforms are gaining market share faster than traditional online retailers because of their ability to offer significantly lower average selling prices across categories such as fashion, beauty and home products.

The brokerage forecasts that Meesho's adjusted EBITDA losses will narrow steadily over the next few years, with profitability expected to improve as scale increases. It expects the company to turn free cash flow positive by FY28 and projects EBITDA margins to reach around 3% by FY30.

Despite its positive outlook, Jefferies flagged competition from larger e-commerce players, logistics disruptions and macroeconomic weakness as key risks to the investment case.

The brokerage said Meesho's combination of affordability, logistics efficiency, technology capabilities and deep penetration into India's under-served consumer base creates a business model that is difficult for competitors to replicate, drawing comparisons with successful value-focused retail models such as DMart.

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