Meesho Shares Surge 12% Following JP Morgan's Upgrade to 'Overweight' Rating

Meesho Shares Rise 12 Percent After JP Morgan Initiates Coverage

Meesho shares surged 12 percent in Thursday's trade following the initiation of coverage by US-based brokerage JP Morgan. The e-commerce platform received an 'Overweight' rating from JP Morgan, which also set a price target of Rs 215 per share.

The stock had settled at Rs 172.68 per share on the NSE on Wednesday, indicating an upside of more than 24 percent to the target price from the previous close. During today's trading session, the stock touched an intraday high of Rs 196.62, up 13.86 percent. This marked a significant turnaround, as the stock had declined in the previous three consecutive sessions.

JP Morgan's coverage report highlighted Meesho's unique business model, which is building a discovery-led marketplace that functions as a long-tail advertising network with embedded logistics. This approach caters to a fragmented retail market in India, positioning Meesho for potential growth.

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A comparison of Meesho's valuation with its internet peers reveals a significant disparity. While Meesho is valued at 35 times FY30 estimated EV/EBITDA, discounted back to FY28, factoring in an EBITDA CAGR of 140 percent over FY28-30E, internet peers' average growth is lower at 70 percent over FY26-28E, with a valuation of 30 times EV/EBITDA.

JP Morgan also noted that NMV (number of merchants) growth could outpace user growth, presenting a potential opportunity for the company. However, the brokerage flagged key risks, including potential growth misses and higher logistics costs as Meesho looks to reduce average selling prices.