Ecommerce firm Meesho says free cash flow positive ahead of ₹5,421 cr IPO

Indian e-commerce firm bets on AI, advertising and low-cost logistics to reach profitability as it prepares to test public markets

Meesho, one of India's first major e-commerce platforms preparing to go public, says it has turned free-cash-flow positive despite posting losses in 2025-26 (FY26).

 

The company said profitability will follow as an "outcome" of disciplined capital allocation.

 

Sanjeev Kumar, the company's whole-time director and chief technology officer, said Meesho generated about ₹1,010 crore in positive free cash flow in FY25, including interest income, as accelerating order growth and a low-cost logistics network offset continued losses.

 

The company is now betting on artificial intelligence (AI), logistics efficiency and advertising to drive sustainable margins as it seeks to raise ₹5,421.05 crore through its initial public offering (IPO).

 

“As a business, we always optimise for free cash flow and the simple reason there is that valuation of the company is the summation of all the free cash flows that company will generate or has generated,” Kumar told Business Standard in a telephonic interview. 

 

SoftBank-backed Meesho has set its IPO price band at ₹105 to ₹111 per share. It comprises a fresh issue of up to ₹4,250 crore and an offer-for-sale (OFS) of 105.5 million shares. At the upper end, the offering totals ₹5,421.05 crore. Bidding opens December 3 and closes on December 5.

 

Kumar sought to reassure prospective public investors that the company’s valuation is grounded in improving cash-generation and a disciplined plan for deploying new capital.

 

He said that Meesho has already crossed an important financial threshold and is entering the market from a position of strengthened fundamentals. The company’s investment priorities —AI, customer acquisition and selective inorganic expansion —are structured to accelerate growth while reinforcing the platform’s core business model.

 

Meesho is no longer operating in the red on a cash-flow basis. “We are already positive free cash flow,” he said. “FY25, we have generated positive free cash flow, about ₹1,000 crore, if you include interest income.” He added that profitability will follow from the same discipline: “As we continue to optimise for free cash flow, profitability will follow as an outcome.”

 

The OFS will see major shareholders, including Elevation Capital V, Vidit Aatrey, Sanjeev Kumar, Peak XV Partners and Venture Highway, pare their stakes. 

 

Proceeds from the OFS will go to selling investors. 

 

Kumar said that these long-term investors are selling only a small portion of their holdings and remain confident in the company’s future trajectory. Their limited participation in the OFS, he suggested, reflects conviction that Meesho’s growth runway — and its ability to compound value — remains far from exhausted.

 

“They are selling a very small percentage because they continue to believe that the peak is ahead of us and that we have a lot more to achieve,” said Kumar.

 

He added that the same logic applies to new shareholders entering through the IPO. “We have always optimised for the right long-term investors, people who believe in the mission and the business model,” he said.

 

The funds from the fresh issue will be used to support organic expansion, upgrade technology infrastructure and bolster Meesho’s marketplace operations. Investments in AI are central to the platform’s growth and user engagement.

 

“Technology is a foundation of this entire platform,” he said, noting that Meesho uses AI to personalise recommendations, improve seller tools and reimagine the shopping experience.

 

He said that ranking and recommendation algorithms are crucial and will continue to evolve. He also highlighted AI’s role in enhancing customer interactions, particularly in deeper rural markets.

 

The company already leverages AI to manage a growing ecosystem of over 706,000 sellers in the last 12 months as of September 30, 2025, and 1.26 billion placed orders for H1 FY26.

 

He said that Meesho built an in-house AI stack, the Bharat ML Stack, which allows engineers and data scientists to deploy new AI algorithms efficiently at scale. “On a daily basis, it processes about close to 2 petabytes of data,” he noted.

 

The investments may also include  future inorganic growth. Kumar said Meesho will evaluate opportunities that enhance its platform or open adjacent avenues aligned with its mission.

 

Despite posting a loss in FY25, Meesho’s user and order metrics continue to show strong momentum, suggesting room for further growth as the platform scales.

 

Kumar noted that Meesho has reversed earlier trends and produced positive results in Fiscal 2025. 

 

In the six months ended September 30, 2025, Meesho reported 234.2 million annual transacting users, up from 175.1 million a year earlier. Orders rose to 1,261.14 million from 824.59 million over the same period in 2024. On the seller side, annual transacting sellers climbed to 706,000 in the 12 months through September 2025, compared with 440,000 a year earlier, with each seller averaging 3,214.5 orders—a sign of strong engagement and platform stickiness.

 

Kumar said that the company’s rapid growth in annual transacting users—is not driven by subsidies or discounts, but by structural efficiencies in its marketplace model.

 

In H1 of this financial year, Kumar said the company has grown by about 53 per cent in terms of number of orders and about 44 per cent in terms of net merchandise value. 

 

Kumar outlined two major margin drivers. Through logistics platform Valmo it continues to find a very efficient logistics network, much cheaper than anybody else.  Second is advertising, which he described as early but material. Drawing parallels to Southeast Asia and China, he said, “Ads, seller-run ads continue to be a large source of profit pool.”

 

With more than 7 lakh active sellers, Kumar said the company sees advertising as central to its long-term monetization strategy. 

 

Addressing concerns about customer loyalty and repeat usage in value commerce, he said a lot of efficiencies have been baked into the marketplace itself, which is generally hard to replicate and the scale attained by the firm.

 

Kumar said Meesho’s focus remains on affordability and accessibility, particularly in tier-2 and tier-3 cities.

 

The offering is being led by Kotak Mahindra Capital, J.P. Morgan, Morgan Stanley, Axis Capital and Citigroup. Trading begins December 10.