Comparing India's Big IPOs: Meesho's Dominance Over Peers

New Delhi: The huge surge in Meesho shares after brokerage firm UBS initiated a Buy call on Wednesday made it the best performing IPO amongst the Big ones of 2025. The stock jumped about 20 percent in the session, bringing its profit to about 95 percent from the issue price. According to Trendline data, among the companies that raised more than Rs 5,000 crore this year, Grove's performance was the second best, which is about 43 percent above its offer price.

Meesho, which was listed on December 10 after raising around 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 valuation of the company was around Rs 50,100 crore. This means that after listing, the company has increased the value of investors by about 47,000 crores.

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This increase was mainly due to the strong initial price of Rs 162, which was a premium of more than 46 percent from the issue price. The closing price of the first day was around Rs 170. However, analysts say that due to the investment of large investors, the free-float available for trading is limited. This can mean that even a small amount of demand or a decrease in supply can cause huge price fluctuations. The first set of locked-in shares will open on January 6 next year.

UBS had earlier started 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 flow, which sets it apart from many other internet-based companies. UBS expects Meesho's net merchandise value to grow at a compounding rate of about 30 percent between FY 2025 and FY 2030, which will be seen due to the rapid increase in transaction users and the increase in order frequency. Apart from this, its contribution margin and adjusted Abitda margin are also witnessing improvement due to the benefits of increasing scale.

In this year's other big IPO, Grove is up about 43 percent from its issue price, and LG Electronics India has gained about 36 percent from its issue price. However, its shares have seen a slight slowing down in recent weeks.

Hexaware Technologies, which raised Rs 8,750 crore earlier this year, is slightly more than 8 per cent above its issue price, indicating a more cautious approach from investors amid global tech spending concerns.

HDB Financial Services, despite good growth at the time of listing, is now only 3 percent above its offer price, as investors are assessing the valuation and growth prospects in the NBFC sector.

Lenskart Solutions is barely sustaining, with gains of less than 1 percent, while Tata Capital has only grown 0.2 percent.

Meesho's superior performance is a sign of increasing value in India's e-commerce sector. Especially because the company is focused on low average order values, high user participation and tight control over costs. UBS said that Meesho is likely to benefit sellers and users of logistics efficiency, which may reduce the average order value further, but will expand the overall ecosystem and increase cell volume.