Can Meesho Balance Growth and Profits in India’s Value E-commerce Market?
Synopsis: HSBC initiated coverage on Meesho with a Hold rating and Rs 160 target price, implying around 12% upside. The broker believes the company’s low-cost e-commerce model supports strong growth, but improving profitability could prove difficult as margin expansion may slow user and seller growth.
Broking HSBC has initiated coverage on Meesho with a ‘hold’ recommendation and a target price of Rs 160 for the e-commerce firm’s shares. The potential upside for Meesho’s shares from current levels is around 12%. HSBC’s ‘Hold’ recommendation on Meesho’s shares is based on its belief that it would be challenging for Meesho to sustain its growth trajectory while at the same time enhancing profitability in India’s competitive e-commerce space.
With a market cap of Rs 62,056 crore, the shares of Meesho Ltd are trading at Rs 138; however, the shares have given a negative return of 16% since their listing in December 2025.
HSBC said Meesho has managed to establish a strong presence in India’s value e-commerce space by focusing on low-cost products and on deliveries where timing is not critical. Meesho’s business model has enabled it to grow rapidly in India’s e-commerce space, especially in smaller cities and towns where price sensitivity remains high among consumers.
While Meesho’s business model has enabled it to grow rapidly in India’s e-commerce space, enhancing profitability in this business model would be challenging for Meesho. Measures taken by Meesho to enhance profitability in this business model would include increasing its commission or reducing incentives for sellers on its platform. This would potentially slow down growth in customers and sellers on Meesho’s platform.
Monetising Data Could Support Long-Term Valuation
HSBC is of the view that the long-term valuation of Meesho will rely on its ability to monetise its customer data and create additional revenue streams outside of its core business of online commerce. For example, advertising and data-based services could create additional revenue streams without affecting user growth.
In the short term, the company has been through some challenging times as well. Nearly 109.9 million shares, amounting to 2% of its total equity shares, are now eligible for trading as the lock-in period has expired. In addition, the Income Tax Department has slapped a tax notice of Rs 1,499.73 crore on Meesho for the assessment year 2023-24, which the company plans to contest.
Financials
The revenue from operations for the company stood at Rs 3,518 crore in Q3 FY26 compared to the Q3 FY25 revenue of Rs 2,679 crore, up by about 31 per cent YoY. However, the net loss stood at Rs 491 crore in Q3 FY26, up compared to the Rs 37 crore loss in Q3 FY25.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
