The initial public offering (IPO) landscape remains vibrant, with Meesho being a notable contender that recently secured approval from the Securities and Exchange Board of India (SEBI).
While the specific dates for the IPO launch have yet to be confirmed, global brokerage firm Bernstein posits that Meesho epitomizes the emerging demographic of “money poor, time rich” consumers in India—those who prioritize cost over convenience.
The Bernstein analysis draws parallels between Meesho and other economically successful retail models such as DMart and Vishal Mega Mart, emphasizing nationwide scalability.
Meesho IPO: Overview and Financials
The e-commerce startup Meesho is poised to generate approximately ₹4,250 crore through a combination of a fresh equity issue and an Offer for Sale (OFS) encompassing up to 175.7 million shares from current investors.
Significant stakeholders, including Elevation Capital, Peak XV Partners, Venture Highway, Y Combinator Continuity, and Golden Summit Limited, plan to divest portions of their investments.
Additionally, founders Vidit Aatrey and Sanjeev Barnwal will each sell around 1.18 crore shares, marking their inaugural secondary market transaction since the inception of Meesho nearly ten years ago.
Bernstein’s Perspective on Meesho IPO: Navigating the Evolving Online Market in India
Bernstein asserted that the digital landscape currently operates on two distinct trajectories. One stream caters to a select, affluent clientele seeking convenience, while the other aims to provide access to the broader consumer base.
Meesho’s ascendant trajectory illustrates the predominance of this latter avenue. The report notes, “Meesho’s swift increase in monthly active users (MAUs) exemplifies this behavioral transformation.”
Recent data reveals that Meesho’s MAUs surged to 28.8 crore by November 2024, with a substantial proportion originating from Tier-II, Tier-III, and Tier-IV cities.
According to Sensor Tower metrics, the platform has exhibited unwavering growth over five years, even as metropolitan competitors appear to have reached a saturation point.
Bernstein characterizes this phenomenon as “long-haul e-commerce”—a model that is more gradual yet inclusive.
Bernstein on Meesho IPO: Emulating Low-Cost Success like DMart
Meesho exemplifies what Bernstein categorizes as “Option 2” pricing, where affordability takes precedence over convenience.
The company capitalizes on a streamlined supply chain coupled with minimal fixed costs, effectively connecting small vendors with consumers through partnerships rather than operating centralized warehouses.
The average order value remains below ₹300, yet the impressive scale facilitates the maintenance of healthy profit margins.
Bernstein positions Meesho alongside prominent retailers like DMart and Vishal Mega Mart, which successfully transformed low-cost offerings into nationally recognized business models.
The report underscores, “Various players, including DMart, Meesho, and Vishal Mega Mart, have achieved notable scalability.”
Advancements in digital payment systems have further enhanced the user experience. The report highlights that 86.7% of rural youth engage with UPI, surpassing the 74% utilization rate found in urban centers.
This shift has alleviated trepidation around online transactions, with many consumers from smaller towns finding their inaugural foray into reliable digital shopping through Meesho.
Bernstein on Meesho: Deciphering Investor Value
Bernstein contends that the outdated notion portraying e-commerce as a domain solely for affluent consumers is now obsolete. The assertion that digital shopping remains exclusive to the upper echelons of the income spectrum misidentifies the pertinent metric, the report argues.
The crucial metric should be whether the platform delivers daily value—something that Meesho does efficiently by reducing expenses for both buyers and sellers.
The IPO offers investors the opportunity to partake in India’s narrative of affordability rather than merely convenience.
Bernstein perceives Meesho as the pioneering internet enterprise capable of translating mass-market economics into a scalable national entity. Its distinction lies not in ostentation, but in its expansive reach.
Source link: Financialexpress.com.
