JM Financial Maintains ‘Reduce’ Rating on Meesho Amid Lock-In Expiry Concerns

Brokerage warns of potential selling pressure as ₹60,000 crore worth of pre-IPO shares become eligible for trading

Brokerage firm JM Financial has retained its cautious stance on e-commerce platform Meesho, maintaining a ‘Reduce’ rating on the stock while highlighting risks related to the expiry of the company’s pre-IPO shareholder lock-in period.

The brokerage revised its target price to ₹180 and warned that a large supply of shares entering the market next month could keep the stock volatile in the near term.

₹60,000 Crore Worth of Shares to Become Tradeable

According to Sebi regulations, pre-IPO shareholders are subject to a mandatory six-month lock-in period following listing. Meesho’s lock-in period for a major portion of its pre-IPO shares is set to expire on June 9, 2026.

As a result, nearly 67.6 per cent of the company’s shareholding — valued at around ₹60,400 crore at current market prices — will become eligible for trading from June 10 onwards.

The brokerage noted that a large part of these holdings belongs to private equity and venture capital investors who have held investments in the company for several years and are currently sitting on significant unrealised gains.

JM Financial analysts believe some investors may look to partially monetise their holdings after the stock’s strong post-listing rally.

Meesho Shares Have Rallied Sharply Since IPO

The brokerage pointed out that Meesho shares have already surged more than 75 per cent since listing, increasing the possibility of profit booking by early investors.

A few institutional investors had already trimmed their exposure during the IPO itself, and analysts believe additional selling pressure could emerge after the lock-in expiry.

Market experts warn that such large-scale share availability often creates a temporary supply overhang in the market, particularly when valuations remain elevated.

Premium Valuation Raises Concerns

JM Financial also highlighted concerns regarding Meesho’s current valuation relative to both domestic and global e-commerce peers.

According to the brokerage, the stock is currently trading at nearly 45 times FY29 estimated adjusted EBITDA, which it considers expensive given the company is yet to achieve operational profitability.

The analysts stated that although Meesho has established a strong position in the value-commerce segment, the current valuation leaves limited room for disappointment in execution or growth.

Profitability Remains a Key Risk

The brokerage further noted that Meesho continues to prioritise growth and market expansion over profitability.

Despite significant improvement in adjusted EBITDA losses during Q4FY26, the company has not provided a clear timeline for achieving operational break-even.

JM Financial estimates that operational profitability may only be achieved by late FY27 or early FY28, limiting near-term triggers for a sustained stock re-rating.

Analysts believe the absence of profitability visibility continues to expose investors to execution risks.

Logistics and Margin Pressures Persist

The brokerage also flagged concerns regarding Meesho’s logistics strategy and operational efficiency.

According to analysts, Meesho’s in-house logistics integration through Valmo declined to the low-50 per cent range during Q4FY26 compared to over 60 per cent in the first half of FY26.

If current levels persist, margin expansion through logistics efficiencies could slow down, especially due to the company’s reliance on third-party delivery partners such as:

• Delhivery
• Shadowfax

The brokerage believes logistics costs and execution efficiency will remain key variables influencing future profitability.

Meesho Maintains Strong Position in Value Commerce

Despite its cautious stance, JM Financial acknowledged Meesho’s strong positioning within India’s rapidly growing value-commerce segment.

The company has built a large customer base by targeting:

• Price-sensitive consumers
• Tier-2 and tier-3 markets
• Small sellers and resellers
• Affordable product categories

Analysts noted that Meesho’s differentiated business model and growing market share remain long-term positives for the platform.

Investors Advised to Wait for Better Entry Levels

While recognising the company’s long-term growth potential, JM Financial advised investors to remain cautious in the near term due to:

• Elevated valuations
• Lock-in expiry risks
• Lack of profitability visibility
• Potential secondary market supply pressure

Market participants are expected to closely monitor investor selling activity after June 10 as well as future management commentary on profitability and operational efficiency.

With India’s e-commerce sector continuing to expand rapidly, Meesho remains a closely watched internet stock, though analysts believe volatility could remain elevated over the coming months.