Meesho shares can fall 28%, warns Nomura after initiating coverage with Reduce call. Here is why

Shares of Meesho tumbled as much as 5% to their day’s low of Rs 221 on the BSE on Friday after international brokerage firm Nomura initiated coverage with a Reduce call and a target price of Rs 167, implying a steep 28% downside from current levels.

Meesho operates a two-sided marketplace that connects value-conscious, mass-market Indian consumers with a long tail of SMEs and small manufacturers. Unlike traditional marketplaces, it monetises through advertising and fulfilment services rather than commissions, and caters to around 90% of India’s online shoppers.

Competition is heating up

Nomura said competition for Meesho could intensify from horizontal e-commerce platforms and quick commerce (QC), even as the company retains an early-mover advantage. The brokerage expects Amazon and Flipkart to step up their presence in QC and value commerce (VC), which are growing faster than overall e-commerce. It pointed to Flipkart’s relaunch of Shopsy in May 2026 with a gamified approach focused on Gen Z and higher user engagement as a step in that direction.

Nomura also expects the overlap with the QC industry to increase, particularly in metros, as quick-commerce players expand beyond groceries and into more product categories while widening their geographic reach. However, it does not expect Meesho to invest in dark stores.

Meesho trading at expensive valuation

While Nomura said it likes Meesho’s asset-light business model, it believes the current share price leaves limited room for execution missteps. The brokerage flagged potential headwinds to margin improvement from third-party logistics (3PL) disruptions and rising competition.

It also noted that Meesho trades at a premium to Eternal and Swiggy despite the two companies having higher NMV growth and cash-generating food delivery businesses. Nomura initiated coverage with a DCF-based target price of Rs 167, implying an EV/NMV of around 1.1x on FY28F estimates. Key risks to Nomura’s forecast include faster-than-expected user additions, an annual decline in AOV of less than 2%, stronger-than-expected advertising margins and lower competitive intensity.

What Nomura likes?

Nomura highlighted Meesho’s asset-light business model, AI-led innovations and improving free cash flow as key attractions. Unlike most other platforms, Meesho does not own inventory or fulfilment assets, while its in-house Valmo platform, which has around 18,000 logistics partners, helps it maintain industry-low fulfilment costs.The brokerage also said Meesho’s use of AI to enhance user experience has been an important driver of its rapid user growth. It expects logistics spread and advertising revenue to increase from around 1.5% and 3% of NMV, respectively, in Q1 FY27 to 2.8% and 5% by FY30, lifting adjusted EBITDA margin from -1.2% in Q1 FY27 to 2.9% in FY30.

Meesho Q1 results

For the quarter ended June 30, 2026, Meesho reported a loss of Rs 133 crore, improving from a loss of Rs 289 crore in the corresponding quarter last year. The company expects year on year growth in net merchandise value (NMV) to slow during the July to September quarter as it steps up spending to acquire new users ahead of the festive season.

According to the company, the softer growth outlook is primarily due to the timing of its flagship Mega Blockbuster Sale, which has been shifted this year from the July to September quarter to the October to December quarter. As a result, the company expects growth in the third quarter to appear stronger, with comparisons expected to even out when both quarters are viewed together.

Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.