However, HSBC believes improving profitability in this model could be challenging, and any gains on the margin front may come at the expense of growth.
It also said that the stock’s longer-term valuation will depend on the company’s ability to monetise customer data beyond its core e-commerce business.Separately, nearly 109.9 million shares, or about 2% of Meesho’s outstanding equity, became eligible for trading on Monday as the lock-in period expired.
The stock fell 10% on Monday after the company received an assessment order from the Income Tax Department, raising a tax demand of ₹1,499.73 crore, including applicable interest, for the assessment year 2023-24.According to Meesho’s disclosure, the demand follows additions and adjustments made by the tax department to the company’s reported income for that year.
Meesho said it is evaluating the assessment order and does not agree with the observations and adjustments made by the tax authority.
The company added that it has adequate legal and factual grounds to challenge the order and is taking the necessary steps to protect its interests.
Currently, six analysts track the stock. Two have a ‘Buy’ rating, three recommend ‘Hold’, and one has a ‘Sell’ call.
Shares of Meesho Ltd. settled 10% lower on Monday at ₹143.34, well below the company’s IPO price of ₹221.
