The tremendous surge in Meesho’s shares on the back of UBS’s buy call on Wednesday made it the best performing large IPO of 2025. The stock rose nearly 20 percent in the session, taking its profit to nearly 95 percent of the issue price. Among companies that have raised more than Rs 5,000 crore this year, Grove has been the second-best performer, trading nearly 43 per cent above its offer price, according to Trendline data.
Meesho, which was listed on December 10 after raising about Rs 5,421 crore, has a current market cap of Rs 97,600 crore or about $11 billion. At the upper end of the price band, the company’s valuation was around Rs 50,100 crore. This means that after the listing, the company has increased the value of investors by approximately Rs 47,000 crore.
This gain was mainly due to the strong opening price of Rs 162, which was a premium of more than 46 per cent over the issue price. The closing price of the first day was around Rs 170. However, analysts say that the free-float available for trading is limited due to investment by large investors. This could mean that even a small amount of demand or reduction in supply can cause huge price fluctuations. The first set of locked-in shares will open on January 6 next year.
ubs estimate
UBS had earlier initiated coverage of the company with a ‘buy’ rating and a target price of Rs 220, citing several long-term growth factors. The brokerage highlighted the company’s asset-light and negative working capital business model, which has helped it generate consistent positive cash flows, which differentiates it from many other internet-based companies. UBS expects Meesho’s net merchandise value to grow at a compounding rate of approximately 30 percent between FY 2025 and FY 2030, driven by rapid growth in transacting users and growth in order frequency. Additionally, its contribution margin and adjusted EBITDA margin are also improving due to the benefits of increasing scale.
Left the big companies behind
- Among other big IPOs this year, Grove is up about 43 per cent from its issue price, and LG Electronics India has gained about 36 per cent from its issue price. However, its shares have seen a slightly slower pace in recent weeks.
- Hexaware Technologies, which raised Rs 8,750 crore earlier this year, is up a little over 8 per cent from its issue price, reflecting a more cautious approach from investors amid global tech spending concerns.
- HDB Financial Services, despite strong gains at the time of listing, is now trading just 3 per cent above its offer price as investors assess valuations and growth prospects in the NBFC sector.
- Lenskart Solutions is barely keeping up, rising less than 1 per cent, while Tata Capital is up just 0.2 per cent.
Why is Meesho growing?
Meesho’s better performance is a sign of increasing value in India’s e-commerce sector. Especially because the company focuses on low average order value, high user participation and tight control on costs. UBS said Meesho is likely to deliver logistics efficiency benefits to sellers and users, which may further reduce average order value, but will expand the overall ecosystem and increase sales volumes.
