If you live in a big metro like Mumbai or Bengaluru, your e-commerce world is likely dominated by same-day deliveries and big brand names. But there's another, much larger story unfolding in India's heartland, and at the center of it is a company called Meesho. While giants like Amazon and Flipkart were busy battling for premium customers, Meesho was quietly building an empire by catering to the price-sensitive, brand-agnostic shoppers in Tier-2 and Tier-3 cities. Now, this silent giant is stepping into the spotlight with its much-anticipated IPO.
Key Highlights
- ✓ Meesho quietly became India's largest e-commerce platform by order volume, shipping nearly 29-31% of all orders.
- ✓ A pre-IPO drama erupted as major investors like Capital Group and ICICI Prudential Mutual Fund pulled out over a preferential allotment to SBI Mutual Fund.
- ✓ Despite soaring revenue, the company posted a staggering loss of ₹3,945 crore in FY25.
- ✓ The company's reliance on Cash-on-Delivery (COD) is a huge challenge, with a success rate of only 77% compared to 97% for prepaid orders.
- ✓ The IPO aims to raise as much as ₹5,420 crore, valuing the company at roughly ₹50,096 crore.
The Secret Sauce Behind Meesho's Rise
So, how did Meesho become such a force? It’s pretty fascinating, actually. Instead of playing the same game as its competitors, it flipped the script. The core of its strategy was a revolutionary zero-commission model for most sellers. Imagine you're a small manufacturer or a home-based business; this is a game-changer. Suddenly, you can reach millions of customers across the country without paying hefty upfront fees.
This approach brought sellers to the platform in droves, creating a massive, ever-changing catalog of low-priced goods. This endless variety is exactly what attracts Meesho's target audience—people who are more interested in a bargain than a brand name. They’re willing to wait a week for a delivery if it saves them ₹50 on a t-shirt. It’s a completely different mindset from the instant gratification culture of the metros.
What’s really interesting is how people shop on Meesho. It's not about searching for a specific item like you would on Amazon. The experience is driven by discovery. Users scroll through feeds, watch videos from micro-creators, and browse trending collections. It feels more like scrolling through Instagram than flipping through a catalog, leading people to stumble upon things they never even knew they wanted. This content-led approach is so vital that a portion of the IPO funds is earmarked specifically to strengthen this creator ecosystem and its feed algorithms.
The Financial Tightrope: Growth vs. Profitability
When you look at the numbers, you see two very different stories. On one hand, the growth is undeniable. Revenue from operations climbed from ₹5,734 crore in FY23 to a whopping ₹9,389 crore in FY25. That's a powerful upward trajectory by any measure. But then you look at the bottom line, and things get a bit more complicated.
The company has been burning through cash. After recording a loss of ₹1,564 crore in FY23 and narrowing it to ₹324 crore in FY24, the losses ballooned dramatically to an eye-watering ₹3,945 crore in FY25. A huge chunk of this is tied to "other expenses," a broad category covering everything from logistics and fulfillment to advertising and seller enablement, which totaled a massive ₹9,120 crore.
The COD Conundrum
Perhaps the biggest structural hurdle for Meesho is its deep reliance on Cash-on-Delivery (COD). While COD was the key that unlocked the price-sensitive Tier-2 and Tier-3 markets, it's also a logistical nightmare. Here's the kicker: COD orders are only successful about 77% of the time. In contrast, prepaid orders succeed 97% of the time. Every single one of those failed COD orders costs the company twice—once for the forward delivery and again for the return journey, all with zero revenue to show for it. On a platform built on low average order values, those costs add up incredibly fast, making the path to profitability a real challenge.
Pre-IPO Fireworks: The Anchor Allocation Showdown
Just when you thought the financials were the main story, a major drama unfolded a day before the IPO even opened. It all revolved around the anchor book—a portion of shares reserved for large institutional investors. Meesho's management made a bold call: they decided to allocate a disproportionately large share of the ₹2,439-crore anchor book to SBI Mutual Fund. We're talking about a massive ₹603 crore chunk.
This decision did not sit well with other major players. Some of the biggest names in the investment world, including Capital Group, Norges Bank Investment Management, ICICI Prudential Asset Management, and Nippon India Life Asset Management, were reportedly unhappy with what they saw as preferential treatment. The gap was described as "yawning"—while SBI MF got its huge slice, a fund like ICICI Prudential was offered just ₹100 crore. In what was seen as a protest, they opted out of the anchor book entirely.
So why did Meesho stick to its guns? Sources close to the company said SBI MF played the role of a true anchor. They had committed to both a price and a quantity well in advance, giving Meesho early clarity. They also signaled their intent to be a long-term investor, willing to buy more shares during the main IPO and even after listing to provide stability. For a tech company facing potential post-listing volatility, that's a valuable assurance. This whole episode has exposed a fascinating shift in India's IPO market, where companies are increasingly taking direct control of these crucial negotiations.
Breaking Down the IPO Details
Despite the anchor book drama, the IPO is moving forward with an impressive lineup of global investors, including GIC, Fidelity, and BlackRock. The public issue opens on December 3, 2025, and runs through December 5. The company aims to raise a total of ₹5,421.20 crore. This is split between a fresh issue of ₹4,250 crore and an offer-for-sale of about ₹1,171.20 crore.
The price band has been fixed at ₹105–₹111 per share. At the upper end, this values Meesho at a staggering ₹50,096 crore. The fresh funds are earmarked for sensible investments: strengthening technology, expanding logistics, hiring AI talent, and deepening its marketplace capabilities. In terms of valuation, its price-to-book (P/B) ratio works out to about 9 times, which seems reasonable compared to its peers, who trade at a P/B of around 17 times. You can't use the popular P/E ratio here because, with its losses, Meesho's Earnings Per Share (EPS) is negative.
Conclusion
The bottom line is this: Meesho is an incredible story of building massive scale in markets that many had written off. Its unique business model, deep connection with its user base, and content-driven shopping experience are powerful assets. However, scale isn't the same as profitability. The company faces significant operational hurdles, from the high costs of COD to intense competition from deep-pocketed rivals.
The pre-IPO investor pushback adds another layer of intrigue to this already complex narrative. For anyone looking at this IPO, the real question isn't whether Meesho can continue to grow. It's whether it can ever turn that phenomenal growth into sustainable profits and healthy cash flows without needing constant capital injections. That remains the billion-dollar question.
