Meesho IPO

It is India's leading e-commerce platform by volume, serving 21.32 crore annual transacting users in the last twelve months ended June 30, 2025. This vast scale drives the core business flywheel, resulting in 202.25 crore placed orders in the same period.

It maintains a strong asset-light, capital-efficient business model by avoiding the ownership of inventory or physical logistics assets. Its capital efficiency (GMV/Capital Employed) drastically improved to 10.45 times in FY25, up from 6.87 times in FY23, demonstrating effective scaling.

The platform is successfully transitioning to generating cash flow, with last twelve months (LTM) free cash flow rising to ₹591.24 crore in FY25, up from ₹199.56 crore in FY24. This positive trend is supported by operating leverage and a negative working capital cycle.

Its technology-first approach focuses on cost efficiency; although placed orders grew at a 33.82% CAGR (FY23-FY25), its server and software tool expenses only increased at a 4.49% CAGR in the same period. It commits to AI/ML capabilities, employing 155 specialized staff as of June 30, 2025.

The Marketplace segment's profitability at the order level (Contribution Margin as % of Net Merchandise Value or NMV) increased substantially from 2.94% in FY23 to 4.95% in FY25. This improvement demonstrates strong movement toward sustainability, as the margin represents marketplace revenue minus direct costs attributed to placed orders.

Its internal logistics platform, Valmo, provides a significant competitive edge by achieving average costs per shipment that are 1% to 12% lower than those of established scaled e-commerce logistics providers for small surface-delivered packages.

Its AOV decreased from ₹336.71 in FY23 to ₹274.27 in FY25, which is strategically beneficial as it attracts value-conscious consumers and allows the company to penetrate lower-priced categories. This decline occurred while total placed orders surged from 102.43 crore to 183.44 crore over the same period.

The platform demonstrates high user retention and stickiness, reflected in its rising Order Frequency, which grew from 7.51 times in FY23 to 9.23 times in FY25. This shows that Annual Transacting Users are purchasing more frequently, reaching 9.49 times in the last twelve months ended June 30, 2025.

It has successfully accessed the valuable, value-focused market beyond major metropolitan areas. In FY25, a significant majority of its users (17.44 crore) Annual Transacting Users, resided outside India's top eight largest cities.

It has incurred historical losses, including a loss before exceptional items and tax of ₹147.69 crore for the three months ended June 30, 2025. It also reported negative cash flows from operations of ₹1,268.49 crore in that same three-month period.

The business relies heavily on cash transactions, exposing it to operational inefficiencies and risks related to cash handling by fragmented logistics partners. For the three months ended June 30, 2025, a significant 75.09% of all shipped orders were fulfilled through the Cash on Delivery (CoD) payment method.

The loss for FY25 was substantially inflated to ₹3,941.71 crore, an over 1,100% increase from FY24. This non-recurring loss was primarily driven by significant exceptional costs associated with a complex strategic company reorganization.

It faces material contingent liabilities, totaling ₹710.43 crore as of June 30, 2025, from disputes and litigation. The largest component is an Income Tax dispute amounting to ₹572.07 crore, posing a substantial financial risk if the resolution is unfavorable.

Its core success relies on specialized technical staff, yet it experienced high attrition rates in FY24: 48.73% in the technology team and 30.30% in the Machine Learning and AI team. High turnover risks derailing core AI development and future platform capabilities.

Its seller base exhibits concentration risk, as nearly half of its Annual Transacting Sellers originate from just three states: Gujarat (16.79%), Uttar Pradesh (15.56%), and Delhi (14.79%) for the last twelve months ended June 30, 2025. This reliance makes it vulnerable to region-specific disruptions or regulatory changes.

Despite improved Contribution Margin, the Marketplace segment still recorded negative profitability (Adjusted EBITDA - Marketplace) of ₹14.84 crore in the three months ended June 30, 2025. While this is a significant improvement from ₹1,598.99 crore in FY23, the core platform remains adjusted EBITDA negative.

The proportion of return orders remains a structural headwind, constituting 7.68% of shipped orders in the three months ended June 30, 2025. A sustained high return rate can negatively impact seller engagement, increase fulfillment costs, and harm overall consumer experience.

The intense competitive landscape mandates continuous and substantial technology and marketing spending. Future strategy requires committing ₹1,390 crore for cloud infrastructure and ₹1,020 crore for marketing initiatives through its subsidiary, posing risk if these investments fail to yield expected returns.