ETtech Explainer: Inside Zepto's IPO U-turn

India's first standalone quick commerce company Zepto has decided to pause its initial public offering (IPO) plans for the time being. Sources told ET that the company plans to refile its draft papers with updated financials after two to three quarters.

How did it come to this? What happened in the background? Let's take a look.

Zepto files for IPO


In December 2025, the five-year-old company confidentially filed its draft papers with the Securities and Exchange Board of India (Sebi) for a $1.3 billion (around Rs 11,000-12,000 crore) IPO.

The Aadit Palicha-led company planned to raise about Rs 11,000 crore through a fresh issue of shares, with the remaining amount coming from existing investors selling their shares through an offer for sale.

Profitability push

In April, ET reported that Zepto had stepped up its pre-IPO roadshows and begun meeting institutional investors ahead of its planned June-July listing.

Sources told ET that the company was targeting full-year post-tax profitability by FY2028-29, while continuing to grow 25-30% quarter-on-quarter.

By then, Zepto had reduced its quarterly cash burn to Rs 850-900 crore in the January-March quarter from around Rs 1,200-1,300 crore a few quarters earlier. This was driven by lower per-order costs and slower network expansion, with its dark store count remaining at around 1,100.

Sebi's IPO green light

In May, Zepto received Sebi's approval for its IPO. At the time, the issue size was expected to be around Rs 8,000-9,000 crore.

However, despite the approval, Zepto's unlisted shares fell nearly 30% during the month (of May), which, in hindsight, was probably the first indication that investor sentiment was weakening. The shares, which had traded at around Rs 52 the previous month, slipped to about Rs 40.

Back then, analysts said the decline reflected weakness in the unlisted market and a broader reassessment of the startup's valuations. The company was valued at around Rs 38,000 crore in the dealer market at the time.

Updated IPO papers

In early June, Zepto filed updated draft papers for a $1 billion (Rs 9,500 crore) IPO.

According to the revised prospectus, the offering comprised a fresh issue of shares worth Rs 8,010 crore and an offer for sale (OFS) of 113 million shares by existing shareholders.

First signs of trouble

On July 27, ET reported that Zepto was considering cutting the size of its IPO by around 20%. The company was looking to raise $650-700 million in fresh capital instead of the originally planned $850 million (Rs 8,010 crore).

The move came after public market investors pushed back on the company's valuation, which they expected to be around $3.5-4 billion. That is almost half the $7 billion valuation at which Zepto had raised $450 million in October 2025, in a funding round led by US pension fund Calpers.

People familiar with the matter said domestic investors were seeking a lower valuation because of market volatility and Zepto's continued cash burn.

Valuation talks hit a roadblock

On July 29, ET learnt that Zepto had begun negotiating the pricing of its IPO and was considering postponing the listing after discussions with public market investors failed to narrow the valuation gap.

Sources told ET that valuation indications from large institutional investors for Zepto's anchor book were in the $2.5-3 billion range. That was much below the $3.5-4 billion valuation discussed previously and less than half the $7 billion valuation from its last funding round.

A final decision

On July 31, Palicha told employees during a town hall that Zepto would refile its draft papers with updated financials after two to three quarters.

Instead of going public immediately, the company will first raise fresh private capital from its existing domestic investors before returning to the public markets.

"The plan is to raise around Rs 1,000 crore, although the final amount has not yet been decided and could change over the coming days," sources told ET.

Palicha also reassured employees that the company's inability to secure favourable terms from public market investors "should not be seen as a reflection of their performance".

His remarks are significant given Zepto's financial position and the need to raise more capital. As of March 31, the company had Rs 5,681 crore in cash, according to its draft prospectus. During the January-March quarter, it reported an operating loss of Rs 1,247 crore.

In comparison, Blinkit parent Eternal had Rs 18,288 crore in cash on its books, while Instamart parent Swiggy had Rs 14,367 crore as of June 30. Both companies also operate profitable food delivery businesses, giving them a stronger financial cushion than Zepto.