Meesho shares jump 12% as UBS sees up to 19% upside

New business data points to the fact that Meesho shares jumped up to 12 percent in Tuesday's market session after brokerage firm UBS boosted its target price on the stock, marking the biggest single-day gain in the last three months.

UBS maintained its "buy" recommendation on Meesho and boosted its target price to Rs 260 per share from Rs 210. The revised target indicates an upside potential of 18.6 percent from the previous closing price.

"We value Meesho using a combination of DCF and multiples. On the multiples approach, we apply a 40x EV/EBITDA multiple (unchanged) on 3YF EBITDA, i.e. average of FY30-31, and discount it back by two years, deriving a PT of Rs 260," UBS stated.

While its FY27 estimates are largely unchanged, UBS boosted its FY29-31 NMV estimates by 7-18 percent, with a similar gain in contribution earnings estimates and a 20-40 percent gain in EBITDA estimates.

"Elevated NMV forecasts reflect the continued flywheel from sellers (+81 percent YoY to 1.04 million in Q1FY27), buyers (+29 percent YoY to 274 million), coupled with rapid expansion in SKUs and logistics partners," it stated.

The brokerage stated the larger gain in EBITDA estimates reflects a stronger medium-term margin trajectory, fuelled by improving ads monetisation and logistics economics.

Management stays confident in the FY27 expansion outlook. Although the shift in Diwali from October 2025 to November 2026 should result in slower expansion in Q2 and faster expansion in Q3, low-30s NMV expansion stays achievable for FY27, UBS stated.

Meesho anticipates around 25 percent NMV CAGR over FY26-31, given substantial runway in both new customers and increased frequency. The firm targets more than 500 million annual transacting users (ATUs) in the medium term, almost twice the 274 million ATUs as of Q1FY27.

The ordering frequency of the oldest user cohorts, on the platform for more than five years, is 20 times the platform average of 10 times and new-user frequency of 6-7 times.

Recently acquired users have additionally shown firm promise, with cohorts of more than three years showing 15 times frequency, while each cohort keeps gain usage.

"These assumptions require logistics costs to continue declining and AOVs to decline at a mid-single-digit rate annually, bringing new customers and use cases onto the ecosystem," it further noted.