Meesho After The IPO: When Growth Isn’t Enough. Losses, Disclosure, And What Investors Must Decide

When the founders of Meesho, Vidit Aatrey and Sanjeev Barnwal, tell shareholders that the company will not “sacrifice platform health for quarterly optics” or confuse accounting profits with cash generation, the message is meant to signal discipline and also sets expectations.

That message arrives alongside Meesho’s first quarterly earnings disclosure after a headline-grabbing IPO that delivers a 46% listing premium and briefly pushes valuations past ₹80,000 crore. Public markets, having bought into a perception of operational restraint and improving efficiency, now look for confirmation that discipline will hold under scrutiny.

Instead, Q3 FY26 triggers a different conversation, one dominated not by ambition, but by a sharp expansion in losses.

Growth Held Up. The Bottom Line Did Not.

Measured purely on operating metrics, Meesho’s December quarter is not weak. Revenue rises 31% year-on-year to ₹3,517 crore, with sequential growth of 14%. In India’s intensely competitive ecommerce sector, these are meaningful numbers.

The core marketplace continues to do the heavy lifting, accounting for nearly all operating revenue. Net merchandise value climbs 26% YoY to ₹10,995 crore, pointing to healthy order growth and repeat usage. Seller onboarding remains aggressive, with the seller base expanding 81% YoY to 8.46 lakh – reinforcing Meesho’s strength in long-tail supply.

Even smaller verticals show momentum. Revenue from newer initiatives, including financial services and logistics arm Valmo, rises sharply year-on-year from a low base, signalling management’s intent to build beyond the core marketplace.

But while growth remains intact, financial leverage goes missing.

Net losses widen to ₹490.7 crore, nearly 13 times higher than the year-ago period and 19% higher than the previous quarter. The deterioration is particularly jarring because it occurs during the festive quarter, typically the strongest period for ecommerce due to higher volumes and better cost absorption.

For a newly listed company, the contrast is rather black and white: strong demand on one side, deepening losses on the other.

Is It Fair To Question Losses In A Company’s First Post-IPO Quarter?

The instinctive reaction to post-IPO losses is often binary. One side argues that losses are inevitable in growth businesses. The other treats red ink as evidence that the IPO itself was premature. Both miss the point.

Public markets do not demand profitability at listing. What they demand is clarity of expectations.

That is why the first post-IPO earnings report carries disproportionate weight. It functions as a credibility checkpoint – the moment when private-market storytelling meets public-market disclosure.

Meesho does not approach public markets as a speculative, loss-maximising startup. Its messaging centres on discipline, cash efficiency, and the belief that optics should not be mistaken for economic reality. That framing elevates expectations – not of immediate profits, but of directional consistency.

Investors are not buying near-term profitability. They are buying into the belief that losses are narrowing, cost discipline is improving, and the heaviest phase of inefficiency is behind the company.

That is why questioning losses in the first post-IPO quarter is not hostile. It is structural. The first earnings report after listing becomes the baseline against which execution is judged. The real question is not whether losses exist, but whether outcomes align with what investors are led to expect.

Public markets are willing to fund long-term bets. What they price aggressively is surprise, especially when it appears immediately after capital has been raised.

The Cost Curve Turns Against The ‘Perception’

The widening losses are not driven by weak demand or pricing pressure. They are driven by costs rising faster than revenues.

Total expenditure jumps 44% YoY to ₹4,071 crore, decisively outpacing topline growth. Sequential cost growth of 15% compresses margins further, pushing contribution margins down to 2.3%.

Logistics emerges as the largest pressure point.

Over FY26, Meesho accelerates the expansion of its in-house logistics network, Valmo, as consolidation reshapes the third-party logistics ecosystem. Rather than lean more heavily on external partners, the company chooses to scale internal capacity aggressively through Q2 and Q3.

This is a strategic decision, not an operational failure. The objective is network control and delivery reliability. But the expansion is front-loaded, and the costs arrive immediately.

Rapid node rollouts, overlapping routes, under-utilised infrastructure, and longer delivery distances push up per-order fulfilment costs. With volumes yet to fully catch up, inefficiencies become unavoidable.

Management compounds the near-term impact by absorbing these costs instead of passing them on to consumers during the festive season, citing the risk of damaging trust among price-sensitive users. The result is material margin erosion, with logistics inefficiencies shaving off over two percentage points from contribution margins across Q2 and Q3, including a one-time restructuring charge.

Spending For The Future, Paying Today

Logistics is not the only area of elevated spend.

Employee costs rise nearly 20% year-on-year as Meesho expands its technology teams, particularly in AI and machine learning. Advertising and sales promotion expenses also increase, reflecting continued investment in customer acquisition, brand visibility, and first-time buyer incentives.

The strategy aligns with Meesho’s positioning as a value-commerce platform aimed at onboarding India’s next wave of digital consumers. Educating users and subsidising early transactions are long-gestation bets.

But they come at a cost and that cost shows up clearly in Q3, pushing profitability further away rather than closer.

When Losses Change Direction And What Markets Tolerate

A crucial distinction often gets lost in post-IPO debates: being loss-making is not the same as becoming more loss-making.

Before its IPO, Meesho is undeniably in the red. What changes in the run-up to listing is trajectory. Losses narrow, cost discipline improves, and operating leverage appears increasingly plausible. That directional improvement forms the backbone of the IPO story.

In the first quarter after listing, that trajectory reverses.

Losses widen sharply—both year-on-year and sequentially—despite healthy demand and favourable seasonality. This shift matters because public markets price slope, not just scale.

Losses widening before an IPO are often framed as investments for growth. Losses widening immediately after an IPO raise harder questions around timing, execution, and expectation-setting, even if the strategic rationale is sound.

This leads to the broader question: should loss-making companies be allowed to list at all?

From a market-design perspective, the answer is yes. Under India’s framework, overseen by SEBI, profitability is not a prerequisite for listing. Disclosure is. An IPO is permission to access capital, not an endorsement of outcomes.

Investors are expected to bear execution risk. What they are entitled to is predictability and a reasonable alignment between what is signalled and what materialises.

Thus, post-IPO disappointment is rarely about losses alone. It is about surprise.

The Last Bit, The Public Market Reality Check

Markets do not price roadmaps alone.

Following the Q3 results, Meesho’s stock hit a 5% lower circuit, signalling investor unease. While the shares remain well above their issue price and the IPO itself has not been invalidated, the reaction reflects a shift in tone.

This is never about whether Meesho is profitable today. Investors know it is not. The discomfort lies in direction. Losses narrow ahead of the IPO. In the very first quarter after listing, that trend reverses.

Public markets tolerate long roads to profitability.
What they struggle with is a road that suddenly bends without warning.

Meesho now enters a phase where explanations matter less than outcomes. If margins recover as promised, Q3 FY26 will be remembered as a temporary bulge. If they do not, the company’s narrative of discipline will face far tougher scrutiny.

Either way, the post-IPO honeymoon is over.