To IPO, or to IPOstpone? : What Zepto’s IPO pullback tells a bigger story about business and timing

Earlier this year, Zepto started marketing its much-talked-about IPO with a nosebleed ask of $7 billion. It failed to fly with public investors. By end July, its Stanford dropout founders, Kaivalya Vohra and Aadit Palicha, were ready to slash valuations by 60% and even considered downsizing the issue size by 20%. Still, they failed to get their blockbuster listing out of the door last week.

In retrospect, what seems a crushing blow may well turn out to be fortuitous opening.

The speed with which Zepto has ramped its national footprint, order volumes and brand loyalty is mind-boggling. Within six years of operations, it has become the fastest-growing quick commerce platform in India with order volumes outpacing industry growth in FY26. It already has the second-largest network of dark stores; revenues have also leaped fivefold in the last two years. But with mounting losses, half-baked business plans and huge execution risks, the speed at which it was trying to blaze its way to the bourses would have upended all its gains.

Instead of rushing an IPO and disappointing public market investors, it may be a far better strategy for Zepto to stay private for now and fix its core challenges. It is still just a fast commerce company when all its competitors have significant heft in other areas of e-commerce or physical retail. The platform needs to show its orders can become large and profitable enough to justify the cost of servicing them. And that starts with hauling its average order value that is still the lowest among listed peers. Only then will the unit economics be viable. For a fleet-footed challenger, what good could there be from chasing losses at this scale?

No doubt, a bumper listing remains the most important milestone in a corporate rite of passage, a chance to shine or stumble. It is the possibility of stumbling like Paytm that should give Zepto’s leadership a pause. There are many tech companies – both in India and abroad – which are large and perfectly fine being privately owned. Access to capital doesn’t seem to be an issue given the increasing depth of private markets.

Also Read: Investors slash Zepto’s valuation, delaying India IPO plans

Luckily, Palicha and Vohra have thus far attracted substantial funding from global venture capitalists who may prefer to backstop the losses further if they see a firm turnaround plan and realistic valuations for a bumper payout eventually. For the time being, they are doubling down. Staying private for longer will not delay the company’s value creation but maximise it instead by prolong the unicorn’s longevity.

Hypercompetition is already haemorrhaging the balance sheets of the $14 billion rapid commerce industry by $2 billion every year. It’s safe to assume industry losses in FY 2027 would be even higher on the back of rampant discounting and large capex investments in dark stores, technology, supply chains and customer acquisition. A key catalyst behind Flipkart’s decision to postpone its IPO is arguably the ongoing quick commerce carnage and the need to crank up capital commitments.

Zepto alone accounted for nearly one-third of the industry's cash burn in the previous fiscal year. Continued losses and negative free cash flows have weakened the app’s sales pitch as a value retailer, making public market investors skittish about underwriting the story at premium multiples. Money managers already bruised by depressed sentiments have become extra picky. They only care about returns and not if a shopper ends up being happy on a platform. That is a factor of products and bargain deals -- the very reason why Zepto is in deep red in the first place. It’s tough to visualise a way out of this viscous cycle and take a punt on its future version. Swiggy clawed its way out but only after a Rs 10,000 crore equity raise and a year of painful 30% market share loss.

Financial engineering can only impact at the margins. This is the time for radical realignments and staying out of high visibility. If the problem persists, Zepto should also be open to folding into a bigger rival, leveraging its heft and quick commerce expertise.

For all the undeniable advantages of public markets — access to wider capital pools and investor liquidity – listing also imposes a relentless cycle of scrutiny. Every operational decision gets dissected by multiple stakeholders. In quick commerce especially, this audit extends beyond financial performance to periodically include debates around the sustainability and safety of 10-minute deliveries, hidden fees, quality concerns and the perceived social impact of quick commerce on neighbourhood kirana stores -- an influential vote bank. Many of these issues are unavoidable for businesses of this size but once listed managing public perception becomes almost as important as managing operations. Narratives can change faster than the 10-minute dash for deliveries.

Also Read: ETtech Explainer: Inside Zepto's IPO U-turn

In industries where business models are already well established, quarter-on-quarter discipline keeps a healthy check. Players like Zepto are still defining long-term business strategy while experimenting with delivery models, assortments, advertising monetisation, private labels, and dark-store densities. The optimal model itself is still a work in progress. Private ownership would allow greater flexibility to tune up the business.

One of the underappreciated benefits of remaining private is confidentiality. For a company butting heads against well-capitalised rivals, preserving strategic information can itself be a competitive advantage. ByteDance, the parent of TikTok, is a classic example. Shein built a global fast-fashion powerhouse without any public-market pressures. Ditto for DJI, the world's dominant consumer drone manufacturer. SpaceX shunned an IPO for 24 years until relenting in June this year to support its long investment cycles and ambitious moonshots. Airbnb, Uber, and Palantir all delayed coming to the bourses for the same reasons, allowing management teams to sharpen strategies without investor backlashes. Even legacy brick-and-mortar multinationals, Cargill, Koch Industries, and Mars are still privately held and have restructured businesses away from public glare. Closer home, fintech disrupter Zerodha have repeatedly bootstrapped itself, preferring strategic independence despite its high profits and brand recall. Even Zoho has become one of India's most successful software companies without any external funding, enabling it to pursue unconventional business strategies.

Public markets are also more likely to reward category leaders. Eternal in hyperlocal commerce enjoy a 30-40% valuation/leadership premium over Swiggy despite both operating within the same industry. For challengers like Zepto, that burden is often heavier. They must invest for growth while simultaneously crawl up the valuation ladder. When profitability is still far out, the climb can get tougher. None of this implies that Zepto should never list. It only needs to pick the right moment.