SEBI clears Meesho IPO; e-commerce firm to raise Rs 4,250 crore via fresh issue

SEBI clears Meesho IPO; e-commerce firm to raise Rs 4,250 crore via fresh issue

E-commerce unicorn Meesho has received the green light from the Securities and Exchange Board of India (SEBI) for its initial public offering (IPO), clearing a key regulatory hurdle in its journey to go public.

The market regulator issued its observations on Meesho’s confidential Draft Red Herring Prospectus (DRHP) on October 10, effectively approving the company’s plans to list on Indian exchanges.

Meesho had filed its draft documents earlier this year after shifting its holding structure to India from the US — a move aimed at aligning with domestic listing norms and simplifying compliance.

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Who’s selling shares in the OFS?

According to the company's DRHP, reported earlier by Moneycontrol, Meesho plans to raise Rs 4,250 crore through a fresh issue, alongside an Offer for Sale (OFS) of up to 175.7 million shares by existing shareholders. The company may also undertake a pre-IPO placement of up to Rs 850 crore, which would proportionately reduce the size of the public issue.

Several of Meesho’s marquee backers are set for partial exits. Elevation Capital will offload about 5.54 crore shares, Peak XV Partners (formerly Sequoia Capital India) around 3.05 crore shares, and Venture Highway roughly 1.57 crore shares. Y Combinator Continuity will sell 1.26 crore shares, while Golden Summit Limited will divest about 80 lakh shares.

Founders Vidit Aatrey and Sanjeev Barnwal will also participate in the OFS — each selling 1.18 crore shares — marking their first-ever secondary sale since founding the company nearly a decade ago.

How will Meesho use the proceeds? 

Meesho plans to use IPO proceeds to upgrade cloud and tech infrastructure, invest in AI and engineering talent, and expand marketing efforts. Up to 35 percent of proceeds are earmarked for acquisitions and general corporate purposes.

How has Meesho performed financially?

As reported by Moneycontrol earlier, Meesho’s revenue rose 23 percent year-on-year to Rs 9,389.9 crore in FY25, led by its core marketplace business. The company posted a net loss of Rs 3,941.7 crore, weighed down by technology investments, ESOP costs, and a Rs 1,346-crore one-time restructuring expense from its US-to-India migration.

Meesho’s cost per order dropped from Rs 50.45 in FY23 to Rs 43.08 in FY25, while its contribution margin improved significantly. The company also turned free cash flow positive and ended FY25 with over Rs 5,700 crore in cash and investments and no debt, signalling a lean balance sheet ahead of its listing.

What are the key risks?

More than 75 percent of Meesho’s orders are cash-on-delivery (CoD), which have a lower success rate (75.5%) than prepaid transactions (98%). This dependence, along with tax and legal disputes worth Rs 710 crore, including a Rs 572-crore income tax claim, remains a key risk highlighted in its filings.

The company shipped 1.59 billion orders in FY25, split between its in-house logistics arm Valmo and third-party partners — a critical area of operational sensitivity given its scale.

With SEBI’s approval secured, Meesho can now proceed toward finalising its offer documents and kicking off what could be the first major startup listing of 2026.