Meesho IPO Day 2 Surprise: Grey Market Signals a Sharp Jump in Demand
Meesho IPO Day 2 sees rising bids and a higher GMP in the grey market. Know subscription status, price band, allotment date, and what analysts advise.
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The public issue of Meesho Ltd. kept on drawing considerable interest even on the second day of bidding, thus placing the e-commerce platform in the limelight again after its entry into the primary market on December 3. The offer is to be closed on December 5.
The company, which has adopted a lean-cost operation model, has fixed the price breaching at ₹105 and Rs 111 per share. The offer includes a mixture of a fresh share sale and an Offer for Sale, with the intention of raising a total of Rs5,421.20 crore. Out of this amount, Rs 4,250 crore is expected from new shares while Rs 1,171.20 crore is being allotted to the OFS component. The shares are to be listed on both the BSE and NSE.
Market observers noted an increase in the activity of the grey market. Unofficial trading has set Meesho's shares at a premium of Rs 51 over the issue price, which is an increase from the previous day's premium of Rs 47. The premium of the grey market has jumped from Rs 42 to Rs 51 in merely two sessions, and this hike in the premium is clearly reflecting the bullishness of the investors around the issue's strength to get well subscribed early. The first day had ended with the IPO getting subscribed 2.35 times.
By 10:51 a.m. on Thursday, the IPO had built up a strong demand across the different categories of investors. The total bids amounted to 2.98 times the quantity of shares offered.
Retail investors made bids for 5.23 times their share.
Non-institutional investors (NIIs) subscribed 3.14 times.
Qualified institutional buyers (QIBs) have taken up 2.13 times their lot.
The bidding is still ongoing until Friday. Allotments are scheduled to be done on December 6, but the process might extend to December 8 due to the weekend. One lot consists of 135 equity shares.
Brokerages that analyzed the company's financial history and valuation adopted a long-term perspective.
Rajan Shinde from Mehta Equities not only maintained but also gave a recommendation for the long term on the Meesho IPO. In fact his observation was that the company's revenue growth for FY24 and FY25 remained pretty much unchanged despite the fact that the platform was still working with losses owing to the continuous investment in expansion and the company’s policy of providing a loss-making platform in the long-term. At the upper price of Meesho, the market has a valuation of about ₹50,096 crore which places its FY25 price-to-sales multiple at about 5.3x. According to Shinde the positioning is very similar to that of other digitally listed companies in the market.
He went on to say that the growth of Meesho's monthly active users coupled with the company's operating expense structure being lower than that of its competitors put the company in a good position to gradually acquire more market share.
However, Abhinav Tiwari of Bonanza got the same conclusion but warned the company about its cost challenges. He mentioned that even though they reached 1.8 billion transactions per year, Meesho still faced adjusted EBITDA losses of Rs 5,518 crore during the first half of FY26. In the same period, contribution margins fell to 3.8%, down from 5.6% in FY24. Acknowledging the fact that there has been a recent positive turnaround in the company's free cash flow, Tiwari still indicated that sustained profitability is not yet there due to the strong competition posed by Amazon and Flipkart.
The brokerages such as ICICI Direct, Marwadi Shares and Finance, SBI Securities, Master Capital Services, Swastika Investmart, and Ventura Securities have also given “subscribe” ratings.
