Meesho emerges as India's top free-cash-flow generator ahead of IPO

IPO-bound Meesho has swung to positive free cash flow in FY25, with analysts crediting its no-inventory, no-logistics, asset-light model for driving margins, capital efficiency and rapid scale

IPO-bound Meesho has emerged as India’s strongest free-cash-flow generator among scaled listed e-commerce companies, producing ₹1,032 crore over the last twelve months in FY25, according to people familiar with the figures.

 

Analysts tracking the development say Meesho’s model, which avoids owned inventory and logistics, is allowing it to expand margins and cash generation faster than peers in India’s consumer-internet sector.

 

Last twelve months’ free cash flow swung from negative ₹2,336 crore to a positive ₹1,032 crore (with interest income) and ₹591 crore (excluding interest income), reflecting the benefits of an asset-light, capital-efficient model that allows the company to grow scale and depth without significant capital outlay.

 

Meesho competes with players such as Amazon, Flipkart and Snapdeal.

 

How is Meesho different? Meesho operates an asset-light business model, according to analysts. They said the company does not manufacture or sell private-label products, own product inventory or maintain logistics infrastructure. This makes its platform more capital-efficient compared to organised retail models or other e-commerce businesses that depend on physical stores, warehousing, owned inventory or captive logistics.

 

According to the company’s Updated Draft Red Herring Prospectus (UDRHP), platform-based models possess faster scalability and an asset-light structure, enabling more capital-efficient growth and delivering higher returns on capital while generating stronger free cash flows. By leveraging the existing capacity and capabilities of its sellers and logistics partners, Meesho has been able to scale its operations efficiently while remaining capital-light.

 

“Meesho’s FY25 performance stands out as clear evidence that India’s next generation of digital platforms can achieve both growth and capital efficiency, outcomes once thought to be mutually exclusive in the country’s internet ecosystem,” said a person.

 

Building on this foundation, the company aims to further strengthen cash-flow generation through increasing scale, enhanced monetisation, inherent network effects, operating leverage and continued low capital intensity.

 

Meesho’s performance highlights a broader shift in global tech — from growth-at-all-costs to capital-efficient, asset-light marketplaces that convert scale directly into liquidity.

 

This trend is evident across major global platforms. PDD Holdings (Pinduoduo) generated $16.6 billion in free cash flow in FY24. MercadoLibre reported $1.3 billion adjusted free cash flow for FY24, driven by scale across commerce, payments and logistics. Uber Technologies generated $6.9 billion, while Airbnb delivered $4.5 billion, with a free-cash-flow margin of around 40 per cent.

 

All of these companies share a common foundation — technology-led, asset-light marketplaces that convert operating efficiency directly into liquidity. Once a platform achieves network density, incremental scale improves margins and cash flow without requiring proportionate capital investment.

 

The fundamentals driving this efficiency and cash generation in global marketplaces are both applicable and achievable in the Indian context, according to industry sources.

 

Meesho leads India’s value commerce, driven by its cost-efficient, asset-light model, Bank of America Global Research said. The e-commerce platform, which focuses on low-priced goods, mirrors models like PDD and Shopee in China and Southeast Asia and continues to expand access for millions of price-conscious consumers across India.

 

The company emerged as India’s largest e-commerce platform by annual transacting users and annual placed orders, with 198.8 million transacting users and 1.83 billion placed orders in fiscal 2025.