Zepto's Billion-Dollar Market Debut

Synopsis

Zepto, India's fastest commerce company established in 2021, is readying itself for a public listing with the aim to raise greater than ₹10,000 crore, anticipated to come in July–September 2026. The updated DRHP paints a picture of a company which more than doubled its turnover from ₹11,306 crore in FY19 to the current level of ₹22,624 crore in FY26, but incurred losses of ₹5,905 crore in the same period. The key conflicts in the IPO are regulatory restriction by FEMA, the uncertain valuation in the public market, and fierce competition from Blinkit and Instamart.

Origins: A Stanford drop-out idea that exceeded its founders' expectations

Aadit Palicha was nineteen years old when he quit Stanford to solve the problem of grocery supply chain in India. Kaivalya Vohra was 18 years old.

They were originally a kirana store aggregator, known as ‘KiranaKart’, but it did not take off and in 2021, they started from scratch based on one bold idea – grocery delivery in just 10 minutes from specially designed micro-warehouses available within the city.

Aadit Palicha and Kaivalya Vohra, both former Stanford dropouts, founded Zepto in 2021 and it has established itself as one of India's fastest-growing startups, alongside others like Zomato-owned Blinkit and Swiggy's Instamart in the country's fiercely competitive quick-commerce market.

It was an audacious model, in the sense that it was very expensive, very complicated and completely reliant on the density of the city. In three years, Zepto had become one of the most-funded consumer technology startups in India, and one of the most-watched.

The IPO Architecture: What Zepto is Applying and Why

Zepto has filed its Updated Draft Red Herring Prospectus (UDRHP) with SEBI on June 9, 2026, intending to raise ₹8,010 crore through fresh issue and the offer-for-sale (OFS) segment which will make the company the first dedicated quick-commerce company to list on the domestic stock exchanges.

The company plans to go public in the July-September quarter of 2026, depending on regulatory approval and market appetite.

The investment banks that have been engaged include Morgan Stanley, Goldman Sachs, Axis Capital, HSBC, JM Financial, IIFL Securities and Motilal Oswal with Morgan Stanley expected to lead the issue.

Most importantly, the founders aren't selling. Aadit Palicha and Kaivalya Vohra don't have any shares which are up for OFS. The promoter group, along with their families and family offices, hold about 19.6% of the company.

The OFS is investor-driven and the top chunk of it is from entities of Nexus Venture, which will sell a total of 8.78 crore shares.

The majority of the fresh issue proceeds will go towards Zepto's expansion of dark-store network, with ₹1,629 crore allocated to around 1,900 dark stores.

The remaining lease payment for dark stores has been allocated ₹1735 crores till FY30 and for technology and cloud infrastructure, it has allocated ₹1325 crores.

The numbers in the UDRHP convey two messages at once

Zepto said its revenue stood at ₹22,624 crore in the last financial year, which was more than double the ₹11,110 crore it posted in FY25, which also doubled from FY24's Rs 4,454 crore.

That is three years in a row of revenues rising by more than 100 per cent, something hardly any Indian consumer company has achieved.

In FY26, the startup has handled over 640 million orders, which is almost double that from FY25. Annual transacting users rose to almost 48 million.

As the network grew to 1139 dark stores, orders per store still remained on the rise, indicating that as the network expands so does orders.

The other story is then. In FY26, Zepto had a net loss of ₹59.1 billion (about $617 million) as against a net loss of ₹47.0 billion in FY25.

The company admitted in its filing that it could keep making losses and possibly not maintain its growth trend.

There are structural reasons for optimism of the advertising vertical. The advertising revenue of Zepto has surged by over 151 per cent year-on-year to ₹16.4 billion in FY26, even better than its headline revenue growth.

Its ad arm growth suggests a bigger change in its revenue model, which Amazon has been doing well with by monetizing its marketplace with high-margin advertising.

On profitability, however, which is most important to the public market investor, Zepto is behind. Zepto's loss comes to ₹1,248 crore in the March 2026 quarter as compared to ₹858 crore loss of Instamart and adjusted EBITDA profit of ₹37 crore for Blinkit.

The Regulatory Overhang: FEMA and the ED

The UDRHP revealed a development which has attracted as much attention as the financial numbers themselves.

Frequently presented by the Enforcement Directorate under the Foreign Exchange Management Act (FEMA), the summons sought a large number of documents, such as specific invoices, bank files, company holding structures, audited statements from FY21, shareholding details, loans and guarantees.

Kaivalya Vohra was brought before agency on April 17 and April 22 while Aadit Palicha was brought before them on April 20 and May 15.

Both founders signed all the documents they were asked to sign and then each gave further details requested by investigators.

Zepto said since the updated filing date, it hasn't heard any more from the ED. The company has disclosed the same in the risk factors and litigation sections of public offering documents. But in the filing, the possibility of future examinations, fines or legal action is expressly stated.

The Unanswered Question.The Unanswered Question: Valuation

In October 2025, Zepto announced the closing of a $450 million Series H round led by California Public Employees' Retirement System (CalPERS) at a valuation of $7 billion. General Catalyst, Avra, Lightspeed, StepStone, and Nexus Venture Partners participated in the round.

The key uncertainty in the listing of this new IPO is whether that $7 billion number is accurate. People familiar with the situation say a number of mutual funds and family offices that had previewed the company ahead of the IPO have had valuations well below the last private round.

Some market participants have suggested that the reset could be at $5.6-5.95 billion, representing 15-20 per cent discount from the October 2025 level.

Some of the major shareholders are not selling and include Lightspeed, StepStone, Glade Brook and Y Combinator. Some analysts are taking that as an indicator of confidence in the prospect of post-listing appreciation, while others are seeing it as a lack of confidence in the current price.

The market is turning into a sector on a trajectory towards scale

The quick-commerce industry in India has been growing in Gross Merchandise Value from about ₹963 billion in CY2025 to expected growth of 5-7 times to ₹5.1–7.1 trillion by CY2030.

Zepto is the second-largest player in a three-way race in public markets. The company now has more than 20 per cent of the quick-commerce market, which is approximately equivalent to that of Swiggy Instamart, while Blinkit holds the No.1 position.

The IPO is essentially a test of India's public markets to price growth before profitability in a capital-intensive business. If Zepto decides to go public in the July-Sep period, this will be the benchmark it sets for itself and for all other Indian consumer-tech businesses hoping to get a listing on Dalal Street.