Meesho's Stock Surges 8% to Record High: Why This E-commerce Company Might Continue to Rally

Meesho, the newly listed e-commerce company, has seen its stock price soar as much as 8% to a record high of Rs 233, extending its blockbuster run since listing. This surge has taken Meesho's gains to 110% from its issue price of Rs 111 per share in just 7 sessions, with the company's market capitalization now exceeding the Rs 1 lakh crore mark.

What's Driving the Surge?

International brokerage firm predictions have contributed to the stock's upward trend. With a Buy rating and a target price of Rs 220, which the stock has already surpassed, Meesho is expected to experience robust growth. The company's asset-light, negative working capital business model has enabled consistent positive cash flows, setting it apart from many other internet-led businesses.

Growth Predictions

Predictions indicate a 30% Compound Annual Growth Rate (CAGR) in Net Merchandise Value (NMV) over the next few years, with contribution margins and adjusted EBITDA margins improving to 6.8% and 3.2%, respectively. This growth is expected to be driven by an expansion in annual transacting users and an increase in annual ordering frequency.

• Annual transacting users are expected to increase from 199 million to 518 million.
• Annual ordering frequency is predicted to rise from 9.2 to 14.7.
• Average order values are expected to moderate from Rs 274 to Rs 233 as logistics efficiencies are passed on to the broader ecosystem.

Market Debut and IPO

Meesho made its stock market debut on December 10, listing at a premium to its issue price and closing its first session 53% above the Rs 111 IPO price. The company's IPO was highly successful, with strong demand from both institutional and retail investors, resulting in an overall subscription of 79 times.

Remember, this is perspective, not prediction. It's essential to do your own research and consider multiple viewpoints before making any investment decisions.