Meesho IPO Gets SEBI Nod: India’s Value E-Commerce Leader Prepares for ₹6,600 Crore Market Debut

Meesho Limited, India’s largest e-commerce platform by user volume and order count, is preparing for a landmark listing and has received SEBI’s approval for the IPO. Known for making online shopping affordable for everyone, its upcoming IPO has generated notable buzz among investors chasing value-driven internet businesses.

For those wondering what’s behind the hype, this blog breaks down Meesho’s business model, IPO objectives, financial performance, and position against peers. By the end, you’ll know exactly what drives its business, where the IPO money is going, and what that could mean for investors eyeing this digital marketplace.

Business Model: How Meesho Makes Money

Meesho runs a massive online bazaar, a marketplace connecting sellers and shoppers across India. Its focus is not fancy products or premium brands but value, meaning affordable goods with everyday use. Think of it like a giant market lane, available 24/7 on your phone, where people buy things cheaply and sellers make steady income.

The platform unites four groups that power the ecosystem:

• Consumers: Regular Indians looking for daily-use products at low prices.
• Sellers: Businesses and individuals selling their goods online.
• Logistics Partners: Delivery agents and companies transporting products.
• Content Creators: People who make short videos or reviews that help buyers discover new items.

Meesho earns mainly from sellers, not buyers. It doesn’t keep stock or deliver through its own warehouses, that’s called an asset-light model. Instead, sellers pay Meesho small fees for helping deliver orders to customers and for promoting their products on the app, for example, showing an ad that makes their listing appear first in search results. The unique part: Meesho runs a zero-commission policy, meaning sellers don’t pay a sales cut, so prices can stay low.

AI plays a quiet but powerful role. It helps match buyers with products, routes packages efficiently, and supports its self-reinforcing “flywheels”, cycles that make the business stronger as it grows. More shoppers bring in more sellers, more sellers bring better variety, and more orders make deliveries cheaper, a loop that keeps spinning faster.

Objectives of the IPO

The IPO will raise funds through both a fresh issue of ₹4,250 crore and an Offer for Sale (OFS) by existing shareholders. Here’s how the money will be put to work:

• ₹1,390 crore - Upgrading cloud infrastructure through Meesho Technologies Pvt Ltd. (MTPL), spread across FY27 and FY28 to support platform scale and data capacity.
• ₹480 crore - Paying and expanding ML/AI and tech teams. This is critical for maintaining speed and innovation.
• ₹1,020 crore - Marketing and brand-building via MTPL to strengthen recall and customer trust in small-town India.
• Remaining funds - Allocated for acquisitions, other strategic investments, and general corporate purposes.

Financial Highlights

Meesho’s revenue rose sharply from ₹5,897.7 crore in FY23 to ₹9,900.9 crore in FY25, a 29.6% annual growth rate. The topline surge was driven by expanding order volumes (up 33.8% CAGR) and steady service income from sellers.

While FY24 saw a huge turnaround, losses narrowing 80% to ₹327.6 crore, the next year saw a reversal. FY25’s heavy ₹3,941 crore loss looks alarming, but most of it came from one-time items worth ₹3,833 crore linked to restructuring and taxes. Stripping those out, the operational loss shrinks to ₹108 crore, marking a strong improvement toward breakeven.

Margins told a similar story. The contribution margin (money kept per order after direct costs) grew from 2.9% in FY23 to 5.6% in FY24, then stabilized at 4.9% in FY25. This indicates improved cost control and pass-through benefits to sellers.

Average Order Value (AOV) fell from ₹337 to ₹274, a planned move to attract more value-conscious buyers. Total placed orders almost doubled to 183 crore in the same period.

Also noteworthy - it remains completely debt-free, a rare feature in India’s e-commerce space.

Strengths

• Widest Reach: 21.3 crore annual users, with nearly 9 out of 10 living outside major metros, gives Meesho a very deep rural and semi-urban presence.
• Low-Cost Structure: No warehousing or inventory means low overhead costs. Capital efficiency improved to 10.45x - every ₹1 invested generated ₹10.45 worth of merchandise sales.
• High Order Frequency: Users now buy 9.2 times a year on average versus 7.5 earlier, showing strong engagement.
• Positive Cash Generation: Free cash flow rose from ₹199.5 crore in FY24 to ₹591.2 crore in FY25 - a clear sign of operating strength.
• Debt-Free: Zero borrowings mean no interest burden and high financial flexibility.
• AI-Led Efficiency: Advanced AI tools improved logistics costing; internal platform Valmo delivers 1-12% cheaper per shipment than third-party players.

Risks

• Heavy Losses in FY25: The company posted a ₹3,941 crore loss mainly due to one-time strategic restructuring costs.
• High Cash Dependency: 75% of orders are paid via Cash on Delivery, 3 out of 4 orders, which means more handling risk and slower cash cycles.
• Operational Pressure: Despite progress, adjusted EBITDA for the marketplace segment still shows a small loss (₹14.84 crore in Q1 FY26).
• High Attrition in Tech Teams: Nearly 49% of employees in the tech division left in FY24, which can hurt AI execution.
• Concentration Risk: About half of its seller base comes from just three states - UP, Gujarat, and Delhi - exposing it to local disruptions.
• Returns Problem: Roughly 8% of orders are returned, adding cost and friction for sellers.
• Legal Contingencies: Pending tax disputes total ₹710 crore, which could impact cash flow if not cleared favorably.

For complete details, check Meesho’s IPO page here.

Peer Comparison

Source: DRHP

Meesho’s market position and leading scale stands out. But on the profitability front, the large one-time charges make FY25 numbers appear weaker than reality.

What to Remember

• Meesho has built India’s largest value-led marketplace that thrives outside big cities, that’s its real moat.
• Operational metrics like order frequency, cash flow, and capital efficiency are trending strongly upward.
• Losses look steep only because of one-time restructuring charges, not weakening fundamentals.
• However, dependence on CoD, litigation exposure, and high team churn remain short-term challenges.
• Investors should view this IPO as a play on India’s next wave of e-commerce growth - more about low-cost, high-volume commerce than premium digital retail.

It’s not a perfect business, but definitely a large and improving one, carrying strong tailwinds from India’s growing digital consumer base.

Check the complete list of upcoming IPOs here.

Disclaimer

Source: Meesho Ltd's DRHP. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Please be informed that merely opening a trading and demat account will not guarantee investment in securities in the IPO. Investors are requested to do their own independent research and due diligence before investing in an IPO. Please read the SEBI-prescribed Combined Risk Disclosure Document prior to investing. This post is for general information and awareness purposes only and is nowhere to be considered as advice, recommendation, or solicitation of an offer to buy or sell, or subscribe for securities. INDstocks is acting as a distributor for non-broking products/services such as IPO, Mutual Fund, and Mutual Fund SIP. These are not exchange-traded products. All disputes with respect to the distribution activity would not have access to the Exchange investor redressal forum or the Arbitration mechanism. INDstocks Private Limited (formerly known as INDmoney Private Limited) does not provide any portfolio management services, nor is it an investment adviser. Logos above are the property of respective trademark owners, and by displaying them, INDstocks has no right, title, or interest in them. SEBI Stock Broking Registration No: INZ000305337, Trading and Clearing Member of NSE (90267, M70042) and BSE, BSE StarMF (6779), SEBI Depository Participant Reg. No. IN-DP-690-2022, Depository Participant ID: CDSL 12095500, Research Analyst Registration No. INH000018948 BSE RA Enlistment No. 6428.