Meesho Achieves Significant Free Cash Flow in FY25

Meesho has reported an impressive Rs 1,032 crore in free cash flow over the Last Twelve Months (LTM) in FY25, inclusive of interest income. This positions Meesho as the foremost generator of free cash flow among established e-commerce companies listed in India. When excluding interest income, the cash flow amount is Rs 591 crore, a marked improvement from the negative Rs 2,336 crore reported in FY24, as stated in the company’s press release.

Market Trends in Free Cash Flow Generation

The firm noted that there has been a notable transition among global technology companies, moving from growth-driven expenditures to more sustainable and efficient growth supported by robust cash generation. For instance, PDD Holdings reported a staggering $16.6 billion in free cash flow in FY24. Other significant players such as MercadoLibre, Uber, and Airbnb showcased $1.3 billion, $6.9 billion, and $4.5 billion in free cash flow, respectively. These companies operate under asset-light marketplace models aimed at converting operational efficiency into liquidity, where scaling up aids in enhancing margins.

Factors Driving Meesho’s Cash Flow Improvement

Meesho attributed its FY25 enhancement in free cash flow to factors such as scaling operations, effective monetisation strategies, and improved operating leverage. Recently, the company submitted an updated draft red herring prospectus (DRHP) to SEBI and aims to raise between $700 and $800 million through an IPO. This includes a fresh issue of $500 million and an offer-for-sale ranging from $200 to $300 million.