Meesho ends 7% lower today, stock down 21% in last three sessions: What lies ahead

Bengaluru-based newly-listed ecommerce retailer Meesho saw its share price fall over 21% in the last three trading sessions, and 28% from its record high of ₹254.40 apiece. This peak was touched on December 18, just six trading sessions after its debut on December 10, 2025.

The shares of Meesho ended 7.15% lower at ₹187.25 apiece on the national stock exchange (NSE) on Tuesday, December 23. Despite the recent slide, the stock remains above its issue price of ₹111, having listed at a 46% premium on the NSE.

Analysts have largely attributed the recent volatility to healthy profit booking following a meteoric 65% surge in just four days. However, while the stock price experiences a short-term "cool-off," structural reports from global and domestic brokerages suggest a much larger growth story is still in its early chapters.

Swiss multinational investment bank UBS on December 17 had initiated coverage on Meesho giving it a 'Buy' rating.

"Meesho is India's largest e-commerce platform based on annual transacting users (ATUs) with a focus on Tier 2-3 consumers," UBS said. The brokerage believes that Meesho's focus on lower/middle income consumers in India's tier 2 and tier 3 cities provides a growth runway as online adoption accelerates among these consumers. It said that the company's asset light, negative working capital business model has also ensured positive cash flows, unlike other internet businesses.

UBS projects Meesho's ATUs to expand from 19.9 crore in FY25 to 51.8 crore in FY30. The brokerage noted that Meesho's growth will be driven by increasing annual order frequency (from 9.2 to 14.7 times) even as the average order value (AOV) is projected to decline from ₹274 to ₹233 as the company passes logistics efficiencies back to the ecosystem.

The 'flywheel effect'

According to UBS, Meesho has several structural advantages that make it more capital-efficient than traditional ecommerce giants:

• Negative working capital: Meesho pays its sellers and logistics partners 8-20 days after cash is collected, creating a cycle that generated ₹7.8 billion in cash flow in FY25 alone

• Zero-subsidy logistics: Unlike peers that offer free delivery, Meesho does not subsidise logistics costs, passing them (plus a 2-3% premium) to merchants. This ensures the company does not incur a loss on a single-order basis

• Ad-revenue engine: Contribution margins are expected to grow from 4.9% in FY25 to 6.8% by FY30, driven largely by advertising revenue, which is projected to hit 5% of net merchandise value (NMV)

Path to profitability

• EBITDA margins: UBS expects Meesho's adjusted EBITDA margins to reach 3.2% by FY30 (up from -0.4% in FY25)

• Cash flow (FCFE): Fuelled by capital-light model, free cash flow to equity (FCFE) is expected to reach ₹38 billion by FY30

• NMV growth: Overall net merchandise value is modelled to grow at 30% CAGR over FY25-30E, outperforming the broader Indian online market 

Even as short-term stock price fluctuations are common post-listing, UBS rating on Meesho is built on the belief that the company's 30-35% valuation discount relative to its domestic peers is attractive given its "above average" growth trajectory and proven ability to generate cash while scaling.