Morgan Stanley Begins Meesho Coverage with Equal-Weight; Flag full evaluation. Target, check the upside potential

International brokerage Morgan Stanley has assigned an equal-weight rating on the newly listed Meesho and a Rs. has initiated coverage with a target price of 169, citing strong valuation following the stock’s strong post-listing run-up. The target price suggests about 3% upside from current levels.

The brokerage said the valuation looks perfect as Meesho’s advertising business remains in the early stages of monetization, while the company continues to focus on rapid user expansion. As a result, Morgan Stanley expects steady-state profitability to be a few years away.

The brokerage believes investors are likely to value the business by discounting FY31 adjusted EBITDA margins or applying an EV to NMV multiple to FY28 estimates, similar to the EV to revenue approach used for offline retail. On its estimates, Meesho is currently trading at 1.14x FY28 EV to NMV, which it considers reasonable given its expectation of steady-state margins of 3.8% of NMV. Rs. A price target of 169 implies a multiple of around 1.2x FY28 EV to NMV, which is at a modest discount to Blinkit’s estimated multiple of 1.4%. In Morgan Stanley’s Internet coverage universe, Meesho ranks in the middle of its list of picks.

What do analysts like?

Meesho has built significant scale in the value e-commerce segment since its inception in 2015. The platform had about 234 million annual transacting users and over 700,000 sellers as of September 2025, operating at an average order price of about US$3. It offers a wide product assortment with around 153.72 million daily active listings supported by a hyper-personalized product feed. Morgan Stanley noted that 74.57% of orders were generated through these feeds or driven by platform recommendations. The company also operates an asset-light marketplace model, which supports strong capital efficiency. The brokerage believes that Meesho faces limited competition in the value commerce segment in which it operates.

Meesho is positioned as a thematic play on India’s consumption story and has built strong moats in the value commerce segment. Morgan Stanley said the company’s business model mirrors global platforms such as PDD in China and Shopee in Southeast Asia. Meesho has achieved scale and leadership in India’s e-commerce market across various retail categories, measured by gross merchandise value or order volume, and is backed by a strong founder and management team.

Financial forecasting

Morgan Stanley expects Meesho to become one of the fastest growing players in India’s goods retail sector. It has forecast a 26% compound annual growth rate in net merchandise value for Meesho’s marketplace business during FY26-FY28. Adjusted EBITDA margin is projected to improve from minus 3.2% in FY26 to 0.5% by FY28, with steady-state margins estimated at around 3.8% of NMV by FY31.

Morgan Stanley’s Bull Case

An international brokerage said it would be more positive on the stock if demonetization moves faster than expected without hurting growth. In such a scenario, the brokerage expects the stock to re-rate to 40x FY31 forecast adjusted EV to EBITDA, in line with its target multiple for Eternal’s Blinkit business. When discounted back using weighted average cost of capital, this valuation is Rs. 239 suggests a one-year forward value, which translates to an upside potential of about 45% from current levels.

Damage risks

Morgan Stanley warned that the adjusted EBITDA loss is likely to widen in the second half of FY26 compared to the first half. It also said slower-than-expected monetization of ad revenue could delay the company’s progress toward breakeven.

Shares of Meesho continue to trade well above their IPO price. Share its Rs. 111 is about 46% higher than the issue price, though it is Rs. 36% slipped from a post-listing peak of 254. Shares of Meesho are down about 8% so far in 2026.

The company entered the stock market on December 10, listing at a premium to its issue price and closed 53% higher on its first day of trading. This share is Rs. 162, a 46% premium to the IPO price, and its first session at Rs. 170 was over.

(disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. (These do not represent the views of the Economic Times.)