The brokerage said valuations look full as Meesho’s advertising business remains at an early stage of monetisation, while the company continues to focus on rapid user expansion. Consequently, Morgan Stanley expects steady-state profitability to be a few years away.

The brokerage believes investors are likely to value the business either by discounting FY31 adjusted EBITDA margins back to the present or by applying an EV to NMV multiple on FY28 estimates, similar to the EV to revenue approach used for offline retail. On its estimates, Meesho is currently trading at 1.14x FY28 EV to NMV, which it views as fair given its steady-state margin expectation of 3.8% of NMV. The price target of Rs 169 implies a multiple of about 1.2x FY28 EV to NMV, at a modest discount to Blinkit’s estimated multiple of around 1.4%. Within Morgan Stanley’s internet coverage universe, Meesho ranks in the middle of its preference list.

What do analysts like?

Meesho has built significant scale in the value e-commerce segment since its inception in 2015. The platform had about 234 million annual transacting users and over 700,000 sellers as of September 2025, operating at an average order value of around US$3. It offers a wide product assortment, with nearly 153.72 million daily active listings, supported by a hyper-personalised product feed. Morgan Stanley noted that 74.57% of placed orders were either generated through these feeds or driven by platform recommendations. The company also operates an asset-light marketplace model, which supports strong capital efficiency. The brokerage believes Meesho faces limited competition in the value commerce segment it operates in.

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Meesho is positioned as a thematic play on India’s consumption story and has built strong moats in the value commerce segment. Morgan Stanley said the company’s business model mirrors proven global platforms such as PDD in China and Shopee in Southeast Asia. Meesho has achieved scale and leadership across several retail categories within India’s e-commerce market, measured by either gross merchandise value or order volumes, and is backed by a strong founder and management team.

Financial forecast

Morgan Stanley expects Meesho to rank among the fastest-growing players in India’s goods retailing space. It has forecast a 26% compound annual growth rate in net merchandise value for Meesho’s marketplace business over FY26–FY28. Adjusted EBITDA margins are projected to improve from minus 3.2% in FY26 to 0.5% by FY28, with steady-state margins estimated at around 3.8% of NMV by FY31.

Morgan Stanley’s bull case

The international brokerage said it would turn more positive on the stock if monetisation progresses faster than expected without hurting growth. In such a scenario, the brokerage expects the stock to re-rate to over 40x FY31 estimated adjusted EV to EBITDA, in line with its target multiple for Eternal’s Blinkit business. When discounted back using the weighted average cost of capital, this valuation implies a one-year forward value of Rs 239, translating into an upside potential of about 45% from current levels.

Downside risks

Morgan Stanley cautioned that adjusted EBITDA losses are likely to widen in the second half of FY26 compared with the first half. It also said that slower-than-expected monetisation of advertising revenues could delay the company’s progress towards breakeven.

Meesho shares continue to trade well above their IPO price. The stock is up about 46% from its issue price of Rs 111, although it has slipped 36% from its post-listing peak of Rs 254. Meesho shares are down about 8% so far in 2026.

The company made its stock market debut on December 10, listing at a premium to its issue price and closing 53% higher on the first day of trade. The stock debuted at Rs 162, a 46% premium to the IPO price, and ended its first session near Rs 170.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)