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HomeMarket NewsMeesho shares gain as much as 8% after net loss narrows in Q4 but concerns remain
HSBC expects Meesho to significantly improve logistics costs over the long-term, although they are already are the lowest in the industry.
Shares of Meesho Ltd. gained as much as 8% in early trade on Thursday, May 7, reacting to their fourth quarter earnings.
The company reported a 47.1% increase in its revenue at ₹3,531.2 crore from ₹2,399.9 crore in the previous year.
Net loss for the period narrowed to ₹166.3 crore during the quarter, compared to a loss of ₹1,391 crore in the year-ago period. The base quarter also had an exceptional loss of ₹1,285 crore. Adjusted for the exceptional item, the losses are wider on a year-on-year basis.
Meesho's earnings before interest tax depreciation and amortization (EBITDA) loss increased to ₹254.72 crore in the fourth quarter from a loss of ₹230.8 crore in the year-ago period.
The company's contribution margins were at 4% in the March quarter compared 2.3% in the previous quarter, 3.3% in the second and 4.4% in the first quarter of financial year 2026.
Meesho's trailing 12 months free cash flow turned to a negative ₹633 crore compared to a pos of 591 crore in the previous year.
Meesho's investments and temporary logistics costs were headwinds in the second and third quarter of the financial year 2026.
Meanwhile, brokerage firm HSBC has a "hold" recommendation on the Meesho stock and has raised its price target to ₹160 per share from 185 apiece. The revised price target still implies a downside of 5.7% from its previous close.
HSBC said the company delivered a strong fourth quarter with ahead-of-guidance margin recovery.
The rising prepaid mix and order intensity are expected to improve logistics efficiency, HSBC said, adding that the advertising and scale benefits are seen as a key long-term margin drivers.
Its free cash flow is expected to turn positive from FY27 amid improving profitability, the brokerage predicted.
Shares of Meesho are trading 5.6% trading higher at ₹207.3. The stock has seen a strong rebound in April and is back towards its post-listing high of ₹254.
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