BofA Sec starts coverage on Meesho with Neutral; near-term upside priced in

BofA expects Meesho to deliver a 26% Net Merchandise Value (NMV) CAGR over FY26-29, driven by 15% CAGR in new user additions and a 13% CAGR increase in order frequency.

Just a couple of days after domestic brokerage JM Financial initiated coverage on Meesho with a ‘Reduce’ rating, global brokerage BofA Securities has begun coverage on the stock with a ‘Neutral’ rating, citing strong execution and structural growth drivers but a balanced risk-reward profile following the sharp rally post listing.

 

In its initiation note dated January 12, 2026, BofA Securities research analysts Sachin Salgaonkar, Pankaj Mehendiratta and Kaushik Gurumurthy set a price objective (PO) of ₹190, implying about 12 per cent upside from the current market price of around ₹170. The brokerage said Meesho is well-positioned to tap India’s value-focused mass market segment, but added that much of the near-term upside appears to be priced in.

 

Strong growth outlook, valuation caps upside

 

BofA expects Meesho to deliver a 26 per cent Net Merchandise Value (NMV) CAGR over FY26-29, driven by 15 per cent CAGR in new user additions and a 13 per cent CAGR increase in order frequency. The analysts noted that competition in Meesho’s core value-commerce segment remains relatively low, leaving the company well placed to strengthen its leadership over the medium term.

 

The brokerage highlighted Meesho’s lean cost structure, asset-light operating model and negative working capital cycle, describing it as among the most efficient consumer internet platforms in India. Adjusted Ebitda margins are estimated to improve from -3 per cent in FY26E to 3 per cent by FY29E, supported by operating leverage and improving monetisation.

 

That said, BofA struck a cautious note on valuation. Since its IPO, Meesho shares have risen 49 per cent, while the benchmark Nifty has remained largely flat. According to the analysts, current valuations already factor in strong execution and partially assume Meesho can sustain momentum similar to global peers such as PDD and Shopee, resulting in a balanced risk-reward.  CATCH STOCK MARKET LIVE UPDATES TODAY 

Ads and logistics to drive monetisation

 

The brokerage identified advertising revenues and logistics pricing as Meesho’s key monetisation levers. Meesho has shifted its advertising model from cost-per-click to an ROI-based structure, which BofA believes makes the platform easier for sellers to adopt. Ad revenues as a share of NMV are expected to increase from 2.8 per cent in FY25 to 4.3 per cent by FY30E, aiding margin expansion.

 

On logistics, Meesho’s strategy remains focused on reducing costs for sellers rather than maximising profits. BofA models logistics costs declining from ₹40 per order in FY25 to ₹26 by FY30E, with savings passed on to users and sellers to enable lower-priced products and drive user growth.  ALSO READ | Q3 Results Today 

Upside drivers, risks remain

 

BofA’s ₹190 price objective is based on an equal-weighted average of DCF valuation and a 30x FY29E EV/Ebitda multiple, compared with 35-40x for Indian internet peers such as Nykaa and Swiggy.

 

Potential upside drivers include market share gains from larger e-commerce platforms, scaling up of fintech offerings, and medium-term expansion into the high-TAM grocery segment. Key risks include intensifying competition, while stronger-than-expected ad monetisation could provide upside, the analysts said.    Disclaimer: The views or investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.