Inside Zepto's profit push ahead of its IPO

Zepto's $1-billion initial public offering (IPO) comes at a time when the quick commerce sector is entering another investment cycle, with incumbents and new entrants continuing to spend on expansion and customer acquisition.

While the company trails just Blinkit in order volumes, analysts and industry executives said its low-price strategy has come at the cost of monetisation.

Zepto reported the highest operating losses among the top three quick commerce players in FY26, even as its unit economics improved. Analysts said that its model requires significantly greater scale for its unit economics to work. As a result, analysts and institutional investors said the focus of the IPO is likely to be on the pace at which the company can improve monetisation while maintaining growth.


According to the company's draft red herring prospectus (DRHP), Zepto processed 640 million orders in FY26, behind Blinkit's 917 million and ahead of Swiggy Instamart's 412 million.

The company operated 1,139 dark stores across 66 cities as of March 2026 and handled about 1.8 million orders a day.

Its annual transacting user base stood at 48 million. While Zepto accounted for about 35% of order volumes among the top three players, its share of net order value was lower because of its smaller basket sizes.

Brokerage firm Jefferies estimates Zepto’s average order value at around Rs 357, compared with Rs 530 for Blinkit and Rs 490 for Instamart. Analysts attributed the gap to Zepto's everyday-low-price strategy, which prioritises frequency and affordability.

The company reported an adjusted Ebitda loss of about Rs 5,000 crore in FY26, compared with losses of Rs 3,500 crore at Instamart and Rs 277 crore at Blinkit.

On a per-order basis, however, losses narrowed to Rs 79 in FY26 from Rs 136 a year earlier, reflecting improvements in supply chain efficiency and lower marketing costs.

Jefferies noted that reported free cash flow losses also improved during the year.

“Investors will be looking at the trajectory of monetisation and margin improvement rather than growth alone,” said an internet sector analyst, asking not to be named. “The company has demonstrated demand at scale. The next phase will be judged on operating leverage and profitability.”

The IPO comes amid continuing expansion across the quick commerce sector. Data compiled by Kotak Institutional Equities shows the top three players ended FY26 with 4,525 dark stores and a combined gross merchandise value of about Rs 92,000 crore, nearly double the previous year. The three platforms together processed almost 2 billion orders during the year.

“To some extent scale is important for the model to work. However, everything may not be related to scale. Even today, Zepto has close to a 19% market share within quick commerce, which is not insignificant. The bigger challenge is take rates and average order value (AOV),” said Karan Taurani, executive vice president, Elara Securities.

No blue ocean

Competition is also broadening beyond the established players with Amazon scaling its quick commerce service that include plans to increase its network to around 1,000 dark stores, while Flipkart is targeting about 1,600 dark stores by the end of 2026. Reliance Retail has said its hyperlocal delivery network already serves more than 5,100 pin codes across 1,200 cities.

Brokerages also indicated that pricing competition remains active.

Kotak said Zepto continues to offer free deliveries at lower minimum order values, while Amazon and Flipkart are using discounts and cashback offers to acquire customers. Blinkit and Instamart, by comparison, have become more measured on pricing and incentives.

In a May 28 interview with ET, Swiggy founder and group CEO Sriharsha Majety, highlighting the firm’s current focus on unit economics, had said that companies that ignore economics for too long risk painful corrections when market growth slows. “If you go unchecked on economics for too long and if you have to correct when the market has slowed down dramatically, the music stops very hard,” he said, adding that Swiggy had made its strategic choice.

“The sector remains in expansion mode. The pace of growth remains high, but investors are increasingly comparing platforms on profitability metrics, cash burn and monetisation,” another Mumbai-based analyst said. “For Zepto, the IPO comes as quick commerce moves from a customer acquisition story to one where investors will track how scale translates into financial performance”.

While Zepto, like Swiggy, is undertaking expansion at a more cautious pace, market leader Blinkit has chalked out plans to increase its dark store count to 3,000 by March 2027.

“Zepto’s overall losses are substantial but the market is projected to grow at roughly 40-50% annually, which means companies with meaningful market share will continue to grow,” said Sandeep Abhange, research analyst, LKP Securities, a Mumbai-based brokerage.