Zepto IPO Faces Valuation Pressure as Top Funds Seek Deeper Cut
· 5 min read · Written by the BuyUnlistedShares desk. Information only, not investment advice.
Zepto's much-awaited IPO has run into a valuation standoff, with domestic mutual funds and insurers pushing for a price sharply below what the quick-commerce company and its foreign backers are seeking.
Reviewed by the BuyUnlistedShares desk
Zepto's initial public offering was expected to be one of 2026's marquee internet-sector listings. Instead, it has turned into a prolonged standoff over price. Domestic mutual funds and large insurers are pushing for a valuation well below what the quick-commerce company and its overseas investors are seeking, and the disagreement has already reshaped the IPO's timeline.
Here's a breakdown of how the valuation gap opened up, what each side is arguing, and where the IPO stands as of now.
How Zepto's IPO Journey Started
Zepto — originally incorporated as Kiranakart Technologies in 2020 and renamed in 2025 — filed its confidential draft IPO papers with SEBI in December 2025 and received the regulator's observation letter in May 2026. It filed an updated draft red herring prospectus (UDRHP) in June 2026, planning to raise about ₹8,010 crore through a fresh issue, alongside an offer for sale by early investors including Nexus Ventures, Contrary Capital, and General Catalyst-linked entities. The total issue size was estimated at close to ₹9,500 crore.
At the time of the private funding round in October 2025 — led by the California Public Employees' Retirement System (CalPERS) and General Catalyst — Zepto had touched a peak valuation of $7 billion.
The Valuation Gap Explained
As the IPO neared, the numbers being discussed by different parties diverged sharply:
Even after Zepto itself brought its ask down from the $7 billion peak to a $4–5 billion range, domestic institutional investors were reportedly seeking a valuation 30–40% below that reduced figure — effectively in the $3–3.5 billion band. Some reports indicated that certain large domestic funds told the company directly that they would not subscribe to the issue even at the lower valuation being floated.
Why Domestic Investors Are Pushing Back
A few recurring concerns show up across investor commentary on Zepto's proposed pricing:
• Zepto does not have a food-delivery business, unlike listed peers Eternal (Zomato/Blinkit) and Swiggy, which some investors use as a reference point for valuing quick-commerce margins.
• The wider quick-commerce sector continues to post weak or negative peer performance on public markets, making investors cautious about paying a premium multiple.
• Zepto's own financials show a widening net loss even as revenue grows quickly — a combination that draws extra scrutiny from valuation-conscious institutional buyers.
• Cash burn across the quick-commerce category remains high, raising questions about the timeline to sustainable profitability.
Zepto's Recent Financial Performance
Revenue from operations more than doubled year-on-year, but the net loss also widened over the same period. Separately, Zepto has reported that its adjusted EBITDA loss per order narrowed from ₹110 to ₹59, which the company points to as evidence of improving unit economics even as topline losses grow in absolute terms.
What Happened Next: Delay and a Pre-IPO Round
Rather than accept a steep valuation cut, Zepto chose to pause its public listing plans. Key developments since the standoff became public:
• In July 2026, reports indicated Zepto could trim its IPO size by about 20% in response to the lower valuation being discussed.
• By late July 2026, the company was reported to be considering delaying the IPO entirely and instead raising roughly ₹1,000 crore from existing investors through a private placement.
• On August 1, 2026, Zepto closed a pre-IPO private placement, reportedly raising over ₹1,000 crore (around $105 million) from a select group of investors.
• At a company town hall on July 31, 2026, CEO Aadit Palicha said IPO discussions were ongoing and that the company has until November 2027 to list without needing to refile its draft papers.
• Multiple reports now point to a revised listing window of February–May 2027, instead of the originally planned July–September 2026.
What This Standoff Signals for Quick Commerce
Zepto's experience highlights a broader recalibration underway in how domestic institutional investors are pricing loss-making, high-growth internet businesses ahead of public listings. Where earlier private rounds were often priced on growth and market share alone, mutual funds and insurers evaluating a public listing appear to be applying tighter scrutiny to margins, cash burn, and comparability with already-listed peers.
For Zepto specifically, the eventual outcome will depend on whether the company can narrow losses further, demonstrate a clearer path to profitability, or find enough demand among foreign investors and large family offices to bridge the gap with domestic institutions.
Frequently Asked Questions
1. Why is Zepto's IPO facing valuation pressure?
Domestic mutual funds and insurers believe Zepto's proposed IPO valuation is too high relative to its losses, cash burn, and the weak public-market performance of quick-commerce peers. They are seeking a valuation as much as 30–40% below the company's already-reduced ask.
2. What valuation was Zepto seeking for its IPO?
After moving down from its October 2025 peak private valuation of $7 billion, Zepto was reported to be targeting an IPO valuation in the $4–5 billion range.
3. What valuation are domestic investors proposing instead?
Reports indicate large domestic mutual funds and insurers were seeking a valuation in the $3–3.5 billion range, well below Zepto's revised ask.
4. Has Zepto's IPO been cancelled?
No. The IPO has not been cancelled, but it has been delayed. Zepto is reported to be targeting a revised listing window between February and May 2027, instead of its original July–September 2026 timeline.
5. What did Zepto do instead of proceeding with the IPO at a lower valuation?
In August 2026, Zepto closed a pre-IPO private placement, raising over ₹1,000 crore from a select group of existing investors, while it continues to work toward an eventual public listing.
6. How large was Zepto's proposed IPO?
The updated draft red herring prospectus filed in June 2026 proposed a fresh issue of ₹8,010 crore, along with an offer for sale of shares by early investors, taking the total estimated issue size to around ₹9,500 crore.
7. How has Zepto's financial performance looked recently?
Revenue from operations grew from ₹11,110 crore in FY25 to ₹22,624 crore in FY26, while net losses widened from ₹4,700 crore to ₹5,905 crore over the same period.
8. Does Zepto need to refile its IPO papers because of the delay?
According to the company, it has time until November 2027 to complete its listing without needing to refile its draft IPO documents, based on SEBI's current approval timelines.
Disclaimer:
This is written for educational and informational purposes only. Nothing here constitutes investment advice or a recommendation to buy or sell securities. All data is sourced from publicly available information. Investments in securities markets are subject to market risks — please read all offer documents carefully before investing.
