Motilal Oswal starts Meesho at Buy, sets Rs 240 target on marketplace growth outlook

Motilal Oswal expects Meesho’s marketplace NMV to grow at a 25% CAGR from FY26 to FY31, aided by advertising monetisation, logistics gains and negative working capital. The brokerage forecasts free-cash-flow generation from FY27 and break-even by end-FY28.

— Source publishedMon, 27 Jul, 2026, 16:38 IST·First seen Mon, 27 Jul, 2026, 16:51 IST·Source NDTV Profit

What happened

Motilal Oswal initiated Meesho at Buy with a Rs 240 target, forecasting 25% NMV CAGR through FY31. It expects the asset-light marketplace’s negative working

Key facts

  • Buy rating
  • Rs 240 target price
  • 30x FY31 estimated adjusted marketplace EBITDA
  • 1.4x FY28 EV/NMV
  • ~10% premium to Eternal FY28 valuation
  • 25% FY26-FY31 marketplace NMV CAGR
  • break-even by end-FY28
  • ~660 basis points adjusted marketplace EBITDA margin expansion
  • FCF from FY27
  • FCF exceeding 4% of NMV by FY31
  • ~Rs 4,800 crore FY31 adjusted EBITDA
  • ~3.75% FY31 EBITDA margin
  • ~25 days negative working capital
  • 274 million annual transacting users
  • over 2.8 billion LTM orders
  • ~3.5% FY26 contribution margin
  • ~4.6% Q1 FY27 contribution margin
  • ~2.5% medium-term logistics contribution to NMV
  • ~3% of NMV advertising revenue
  • ~9% seller marketing budgets allocated to advertising
  • ~400 basis points contribution-margin expansion
  • 7.5% FY31 contribution margin

Why this matters

Meesho’s projected shift toward cash generation could strengthen its strategic flexibility for logistics, seller-services and advertising ecosystem investments.

What to watch

  • Quarterly NMV growth versus the implied 25% FY26-FY31 CAGR.
  • Advertising revenue growth, seller adoption and effective take-rate expansion.
  • Contribution margin per order, logistics cost per shipment and return-to-origin rates.
  • Timing and durability of free-cash-flow generation from FY27 onward.
  • Cash conversion cycle and whether negative working capital remains stable as scale increases.
  • Customer repeat rates, order frequency and share gains versus Flipkart, Amazon and value-commerce competitors.
  • Any escalation in discounting, seller incentives or regulatory changes affecting marketplaces and delivery operations.
  • Increase ad-product penetration among high-volume sellers, including sponsored listings and performance marketing tools.
  • Concentrate logistics investments in dense, repeat-order clusters to reduce cost per shipment and improve delivery reliability.
  • Use improved cash generation to selectively broaden into higher-frequency categories while protecting value positioning.
  • Strengthen seller analytics, catalog quality controls and fulfillment services to raise conversion and reduce returns.
  • Prepare for greater investor scrutiny of contribution margin, ad revenue mix, repeat rates and cash-conversion metrics rather than GMV alone.