Major Meesho Block Deal Announced
A substantial block deal involving Meesho Ltd. shares is underway today, Friday, as shareholder SVF II Meerkat (DE) LLC plans to divest a significant portion of its stake. The firm intends to offload up to 4.77 crore shares, with the transaction valued at approximately ₹1,175 crore.
The shares are being offered at a floor price of ₹246.23 each. This represents a 2.54% discount compared to Meesho's closing price of ₹252.65 per share on the National Stock Exchange (NSE) on Thursday. Morgan Stanley has been appointed as the placement agent for this large-scale transaction.
Analyst Outlook on Meesho's Business Model
Analysts continue to view Meesho as a key player in the expanding value e-commerce sector, particularly within India's smaller cities and underserved markets. Its asset-light operational model, combined with negative working capital and improving unit economics, is highlighted as a unique advantage for a scaled platform business.
Reports from financial institutions suggest a strong potential for long-term earnings growth, driven by increasing transaction volumes, enhanced monetization strategies, and greater fulfillment efficiency. Projections indicate a 25% net merchandise value (NMV) compound annual growth rate (CAGR) from FY26 to FY31, fueled by user acquisition and platform adoption.
Recent Performance and Future Projections
Despite a slight miss on net merchandise value (NMV) growth in Q2, which the management attributed to a delayed festive season, Meesho reported a 21% year-over-year increase in annual transacting users (ATU). A notable positive was the sequential improvement in contribution margin (CM), which rose by 140 basis points to 6% in the quarter.
Higher advertising monetization and normalized logistics are expected to further boost contribution margins, potentially reaching 7.8% by FY31. Analysts anticipate operational leverage to lead to a break-even point by FY28, with adjusted EBITDA margins projected to climb to 4%.
"We reiterate BUY with a revised TP of INR265, premised on 30x FY31E adj. marketplace EBITDA, discounted to December 28," stated MOFSL after the Q2 results.
The company's stock has seen positive momentum recently, climbing 10% over the past month, reflecting investor confidence in its growth trajectory and operational improvements.