Meesho Shares Gain 2% as Q2 Loss Narrows, Contribution Margin Expands

Meesho’s Improving Unit Economics Sharpen the Profitability Test

Faster revenue growth and a wider contribution margin strengthened the quarter, but investors will be watching whether operational gains can translate into sustained profitability.

Growth remained broad across users and orders

Meesho’s consolidated revenue from operations rose to ₹4,131.5 crore from ₹3,073.6 crore a year earlier. Net merchandise value (NMV), a measure of the value of goods sold through the platform, increased 23% to ₹12,911 crore. Placed orders grew 17% to 819 million, while annual transacting users rose 21% to 284 million.

The user metrics suggest that growth was not limited to higher spending by existing customers. Annual purchase frequency increased 7% to 10.4 transactions per user, and first-time buyers grew 16% quarter on quarter. Meesho also said NMV in the 90 days preceding Dussehra increased 33% year on year, pointing to strong festive-period activity. These figures show platform scale and engagement, though they do not by themselves establish that growth will be profitable.

A wider contribution margin is the key operating signal

Contribution margin expanded to 6% of NMV from 4.6% in the previous quarter. The company attributed the improvement to logistics efficiencies and stronger platform monetisation. Jefferies also pointed to factors including returns-to-origin performance, order density, network redesign and Valmo efficiencies.

That progress matters because revenue growth alone can obscure the cost of serving a large marketplace. Meesho still reported an adjusted EBITDA loss of ₹170 crore, with the loss equal to 1.3% of NMV. The quarter therefore presents two parts of the same story: improving economics at the contribution level, but a business that has not yet reached operating profitability. Marketplace revenue from operations grew 34% to ₹4,120 crore, supported by advertising monetisation and improved matching of seller demand with consumer intent, the company said.

Brokerage optimism rests on execution beyond Q2

Jefferies retained its Buy rating and raised its target price to ₹285 from ₹240, citing monetisation opportunities in advertising, logistics and adjacent businesses. Motilal Oswal Financial Services also reiterated Buy, with a target of ₹265. It expects NMV growth to be supported by user additions and platform adoption, and sees higher advertising monetisation and logistics improvements as potential contributors to future margin expansion.

MOFSL’s projections include a contribution margin of about 7.8% by FY31 and break-even in FY28; these are brokerage estimates, not company results. Elara Capital retained an Accumulate rating and a ₹270 target, saying consistent progress towards break-even and subsequent margin expansion would be important for any re-rating. Jefferies cited management confidence in a 25% NMV compound annual growth rate through FY31, while also flagging macro pressures from higher input and fuel prices. The range of targets reflects optimism, but also the importance of delivery against assumptions.

Shares showed a mixed intraday response

Meesho shares rose more than 2% in morning trade and touched ₹232.50 on the NSE, extending gains for a third session. They later pared the advance and were down 0.7% at ₹226.10 as of 9:40 a.m. More than 3.5 million shares changed hands in the first 25 minutes. The reversal indicates that an encouraging earnings update did not produce a uniformly positive early response; short-term trading should not be read as confirmation of the longer-term profitability case.

Key Highlights

• Q2FY27 revenue from operations increased 34% year on year to ₹4,131.5 crore.
• NMV rose 23% to ₹12,911 crore, and placed orders grew 17% to 819 million.
• Contribution margin widened to 6% of NMV from 4.6% in the previous quarter.
• Adjusted EBITDA remained negative at ₹170 crore, or -1.3% of NMV.
• Jefferies, MOFSL and Elara maintained positive ratings, with targets of ₹285, ₹265 and ₹270, respectively.

Investor Note: Meesho’s growth and contribution-margin improvement are encouraging, but the investment case still depends on converting these gains into sustained profitability. Investors may weigh actual margin and loss trends against brokerage forecasts, while keeping in mind that target prices are opinions rather than assured outcomes.