Meesho shares surged in Tuesday’s trading session after UBS raised its target price on the e-commerce company from Rs 210 to Rs 260 while retaining its ‘Buy’ rating. The stock climbed as much as 7.25% to Rs 234.95, moving closer to its recent high of Rs 254.65.
Margins improve faster than expected
UBS said Meesho’s growth remains around 30%, while its margins are improving faster than previously expected. The brokerage raised its FY29-31 net merchandise value estimates by 7-18% and increased its EBITDA estimates for the period by 20-40%.
The brokerage attributed the stronger outlook to continued growth in sellers and buyers, expansion in product listings and a growing logistics network.
Meesho’s seller base increased 81% year-on-year to 1.04 million in the first quarter of FY27, while buyers rose 29% to 274 million, according to the UBS assessment cited in the report.
Advertising and logistics support profitability
UBS identified advertising monetisation and improving logistics economics as important drivers of Meesho’s margin expansion.
Logistics costs reportedly declined from Rs 44 per parcel in Q3 FY26 to Rs 42 in Q1 FY27. UBS expects further improvement, while Meesho’s advertising revenue crossed 3% of business in Q1 FY27.
The company’s contribution margin improved from 2.3% in Q3 FY26 to 4.6% in Q1 FY27. UBS expects it to reach around 5% by the end of FY27 and 5.6% by FY28.
Growth outlook remains in focus
UBS expects Meesho to maintain low-30% NMV growth in FY27 and sees a 25% NMV compound annual growth rate over FY26-31.
The brokerage said Meesho is targeting more than 500 million annual transacting users over the medium term, compared with 274 million reported in Q1 FY27.
The sharp movement in the stock came as investors responded to UBS’s revised estimates and its assessment of the company’s improving margins.