Meesho Block Deal: 1% equity worth ₹945 crore changes hands

Block Deal Moves ¥945 Crore of Meesho Shares

On Monday, a block of Meesho shares worth approximately ₹945 crore changed hands, representing about 1% of the company's equity. The deal was executed at ₹200.01 per share in the pre-open session, as reported by CNBC-TV18 and The Hindu Business Line. While the official buyers and sellers were not disclosed, market speculation and subsequent data pointed to Y Combinator, the US-based accelerator, as the likely seller.

The Hindu Business Line reported that the transaction added to selling pressure on the stock. As of 11:36 AM, Meesho was trading at ₹202.28 on the NSE, down 1.66% from its previous close of ₹205.69. The stock opened at ₹207.24, touched an intraday high of ₹212.65 and a low of ₹201.50, with sell orders accounting for nearly 66% of total traded quantity.

Details of the Block Deal

According to The Economic Times, data from the National Stock Exchange (NSE) revealed that the actual transactions were larger than initially reported. Y Combinator-linked entities sold a total of 4.85 crore shares for about Rs 970 crore. Specifically, Y Combinator Continuity Holdings I LLC sold 2,30,27,687 shares, YCS16 Holdings LLC sold 2,06,03,720 shares, and YCVC Fund I L.P. sold 48,47,934 shares. All three transactions were executed at Rs 200.01 per share, which was approximately 2.47% below Meesho's NSE closing price of Rs 205.07.

The block deal price was consistent with expectations set over the weekend. CNBC-TV18 had reported, citing sources, that Y Combinator was likely to sell up to 1.05% stake for ₹957.5 crore, with a floor price of ₹197.5 per share. Sources also indicated a 30-day lock-in on any further stake sale by Y Combinator.

Institutional Buyers Acquire Significant Stakes

The block deal data showed a diverse array of institutional buyers stepping in. Nippon India Mutual Fund purchased the largest single tranche, acquiring 1,00,00,002 shares. HDFC Standard Life Insurance Company bought 75,00,003 shares, and Edelweiss Mutual Fund purchased 34,70,553 shares. Additional buyers identified by The Economic Times included Morgan Stanley, Goldman Sachs, Citigroup, Franklin Templeton Mutual Fund, Societe Generale, Integrated Core Strategies, BNP Paribas, and the Kuwait Investment Authority, among others.

Stock Performance and Company Financials

Despite the morning decline, Meesho shares have seen significant gains over the longer term. The Hindu Business Line reported that shares gained 9.25% over the past month and 11.46% year-to-date, outperforming the Nifty 500. CNBC TV18 provided slightly lower figures of 8.5% and 13.45% respectively, though these differences may reflect different calculation methods.

The company's financial metrics for the first quarter were reported by CNBC. Revenue increased 48% to ₹3,712.8 crore, while the net loss narrowed to ₹132.8 crore from ₹289.4 crore in the corresponding quarter last fiscal. Net merchandise value grew 34% to ₹11,614 crore, and contribution margin improved to 4.6% from 4% in the previous quarter. At the end of the quarter, promoter entities held a 16% stake, with public shareholders and institutions holding the remaining 84%.

Meesho shares ended the previous session lower, as per the CNBC report, but the broader trend remains positive.

Perspectives

• Market speculation vs. confirmed data: Official disclosures did not name the seller or buyers, but NSE block deal data confirmed the identity of Y Combinator-linked entities as sellers and listed institutional buyers, tightening the earlier speculation from market buzz which had projected Y Combinator as the likely sellers.
• Differing stock performance metrics: CNBC reported monthly and year-to-date gains of 8.5% and 13.45%, respectively, whereas The Hindu Business Line reported 9.25% and 11.46%, indicating slight variations in closing calculations.
• Y Combinator's potential moves: While sources indicated a likely offload of up to 1.05% stake at a floor price of ₹197.5, the actual deal price was ₹200.01, slightly above that floor, potentially reflecting market conditions at the time.

This article is based on reporting from CNBC-TV18, The Economic Times, and The Hindu Business Line.