Concerns over profitability, valuation, and pricing have pushed the quick-commerce company’s public listing plans on hold.
India’s quick-commerce race has been defined by rapid expansion, aggressive investments, and soaring valuations. Yet, when it came time to enter the public markets, Zepto encountered a challenge that many high-growth startups eventually face: convincing investors that its valuation matched its financial reality.
Instead of proceeding with its planned initial public offering (IPO), the company has opted to delay its listing, raise fresh private capital, and give itself more time to improve profitability.
IPO Timeline Hits a Speed Bump
Zepto confidentially filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in December 2025.
The company later received regulatory observations and updated its filing in June 2026, seeking to raise Rs 8,010 crore through a fresh issue of shares. Earlier expectations had suggested the overall IPO size, including the offer for sale, could reach Rs 11,000–12,000 crore.
The startup had initially targeted an August 2026 listing.
However, CEO Aadit Palicha recently told employees that the company has until November 2027 to complete its listing without refiling its confidential IPO documents, giving Zepto additional flexibility. According to reports, the company is now targeting a listing between February and May 2027.
Valuation Became the Biggest Roadblock
While Zepto entered the IPO process with a private market valuation of $7 billion, institutional investors reportedly placed a much lower value on the business.
Several domestic mutual funds are believed to have valued the company at roughly $2.5 billion pre-money and about $3 billion post-money, creating a significant gap between investor expectations and the company’s desired valuation.
The difference reflects a broader shift in public markets, where investors are placing greater emphasis on profitability, cash flow, and sustainable growth rather than expansion alone.
Market experts note that anchor investors typically prefer companies to leave room for future upside instead of listing at peak private-market valuations.
Strong Growth, But Losses Continue
Operationally, Zepto has delivered exceptional growth.
Revenue from operations climbed from Rs 4,455 crore in FY24 to Rs 11,110 crore in FY25, before reaching Rs 22,624 crore in FY26.
The company also expanded rapidly, growing annual transacting users to nearly 48 million, increasing daily order volumes to 2.33 million, and operating 1,139 dark stores across 66 cities by March 2026.
However, losses expanded alongside that growth.
Zepto reported:
- FY24 loss: Rs 1,214.79 crore
- FY25 loss: Rs 4,699.71 crore
- FY26 loss: Rs 5,905.19 crore
The company has continued to generate negative operating cash flow since its launch in 2021, largely due to investments in expanding its store network, delivery operations, technology, marketing, and workforce.
Its own IPO filing acknowledges that losses may continue if revenue growth slows or operating costs remain elevated.
Cash Burn Still Under Analysis
One of the biggest concerns for investors remains Zepto’s cash consumption.
Although operating cash outflows improved during FY26, the company still used Rs 3,462 crore in operating activities and reported negative free cash flow of Rs 4,330 crore.
Its cash balance stood at Rs 5,681 crore as of March 2026.
Palicha has previously defended the company’s spending strategy, saying the heavy investments helped secure Zepto’s position in India’s increasingly competitive quick-commerce market.
He has also said mature dark stores are already delivering EBITDA margins of 6–7%, and expects profitability to improve steadily over the coming quarters.
Fresh Funding Instead of a Discounted IPO
Rather than accepting a lower valuation in the public market, Zepto chose to strengthen its balance sheet through a private funding round.
On 1 August, the company completed a pre-IPO private placement, reportedly raising more than Rs 1,000 crore.
The additional capital gives Zepto more time to improve its financial performance while avoiding a public listing at a valuation significantly below its last private funding round.
Competition Is Becoming More Intense
Zepto’s IPO decision also comes as competition across India’s quick-commerce sector accelerates.
Blinkit, Swiggy Instamart, Flipkart Minutes, and Amazon Now are all investing heavily to expand their fulfillment networks and improve delivery speeds.
Unlike Blinkit and Instamart, Zepto remains largely a pure-play quick-commerce company.
While it has diversified into businesses such as Zepto Café, Zepto Pharmacy, private-label products, and Zepto Atom, these newer businesses have yet to demonstrate the scale or profitability needed to materially change investor perceptions.
Its advertising business has shown particularly strong momentum, with revenue increasing from Rs 49.2 crore in FY24 to Rs 1,635.7 crore in FY26, highlighting the potential for higher-margin revenue streams beyond grocery delivery.
A Familiar Story in India’s Startup Market
Zepto’s experience mirrors a broader trend among Indian technology startups entering public markets.
Companies that once commanded premium private-market valuations are increasingly being forced to justify those numbers against public-market expectations focused on earnings, cash generation, and long-term sustainability.
Several recent IPO candidates have either reduced their valuation expectations or delayed listings to strengthen their financial position before approaching investors.
By raising fresh private capital and postponing its IPO, Zepto appears to be choosing patience over compromise.
The strategy gives the company additional time to reduce losses, improve profitability, and demonstrate that its rapid growth can ultimately translate into a sustainable and profitable business before it returns to the public markets.
Source: Forbes
Aadit Palicha, Co-founder and CEO, Zepto. Photo by Madhu Kapparath
