Meesho shares crack 5% as weak Q2 outlook spooks Street; Citi, Morgan Stanley react

Shares of Meesho declined as much as 5% to their day’s low of Rs 181.30 on the BSE on Friday after announcing that it expects on-year growth in net merchandise value (NMV) to dip in the July-September quarter, and plans to increase spending on acquiring new users as it builds up to the festive season.The softer growth forecast stems from Meesho shifting its flagship Mega Blockbuster Sale to the October-December quarter this year from July-September quarter last year.

The company said Q3 growth would consequently appear stronger and that comparisons should normalise when the two quarters are considered together.The company posted a loss of Rs 133 crore for the quarter ended June 30, 2026, compared with Rs 289 crore in the same quarter last year.Marketplace revenue from operations rose 48% YoY to Rs 3,707 crore in Q1FY27.

Meesho attributed the growth to better delivery conversion, aided by lower cancellations and reduced return-to-origin rates, along with higher platform monetisation.What are analysts saying?Citi maintained its Buy rating on Meesho and raised the target price to Rs 220 (16% upside) from Rs 210.

The brokerage called it a solid quarter, with growth in line with expectations and strong marketplace pricing power.

Meesho successfully passed on higher fulfilment costs arising from fuel and wage inflation, while take rates and contribution margins improved despite cost pressures.

Although a shift in festive season timing could weigh on near-term performance, it is expected to support the following quarter.

The brokerage also raised its estimates, citing Meesho's ability to sustain efficiency gains.Also read: Meesho expects slower Q2 growth, to raise festive marketing spendMorgan Stanley maintained its Equal Weight rating on Meesho with a target price of Rs 190.

The brokerage described the quarter as mixed, with losses broadly in line with expectations, while revenue fell slightly short of estimates.

Profitability improved at a faster pace than revenue growth, helped by better delivery conversion and logistics optimisation, which drove an expansion in contribution margins.

Meesho also managed to pass on fuel and wage cost pressures.

However, the merchandise value miss pointed to slower-than-expected order growth.

The company is also planning higher user acquisition spending ahead of the festive season, while a shift in the timing of festive sales could make the next quarter appear softer.JM Financial maintained its Reduce rating on Meesho with a DCF-based June 2027 target price of Rs 185, implying a downside of 2.2%.

The brokerage said management expects soft growth in Q2 as the Mega Blockbuster Sale has been pushed to Q3, compared with the same period last year.

Advertising and promotion spending is also expected to rise sharply in Q2 ahead of the festive season in Q3.

While JM Financial tweaked its segmental estimates after factoring in the Q1 results, its consolidated FY27-29 estimates saw only marginal changes.

The brokerage remains cautious as the stock trades at elevated valuations of around 45x FY29E EV/Adjusted EBITDA, leaving limited room for execution misses.

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