Zepto Puts IPO Plans on Hold Amid Valuation Disagreements

Quick commerce firm Zepto has put its initial public offering (IPO) plans on hold after domestic institutional investors balked at the valuation it was seeking, prompting the company to instead pursue a pre-IPO fund raise of more than Rs 1,000 crore ($105 million) from existing investors, sources said. The company is in discussions to raise the capital at a valuation of around $4-4.2 billion, well above the $2.5-3 billion that domestic mutual funds were willing to ascribe to the company for the IPO, sources said. Zepto was last valued at about $7 billion in a private funding round around nine months ago. Zepto did not respond to a request for comment. The valuation gap reflects growing caution among domestic institutional investors towards loss-making new-age companies, with prospective investors questioning Zepto’s cash burn and demanding a clearer path to profitability before backing the public issue. According sources, the company had been seeking a valuation comparable to listed peers Eternal and Swiggy, but investors have maintained that the comparison was misplaced because, unlike its rivals, Zepto does not have a food delivery business that contributes a significant share of revenues and supports their market valuations. Zepto’s business is centred entirely on quick commerce, spanning groceries, electronics and other daily essentials. Investor concerns were also driven by the company’s spending levels. Zepto was burning more than Rs 900 crore every quarter and had cash sufficient for about three quarters, sources said. Its quarterly cash burn has since reduced to around Rs 700 crore, extending its cash runway by roughly two additional quarters. As of March 31, the company had cash and cash equivalents of Rs 5,681 crore, according to its draft red herring prospectus. The proposed fund raise would be structured as a pre-IPO placement, with the company looking to bring in greater domestic participation even as discussions on the final terms continue. Under Sebi regulations, an IPO-bound company can raise up to 20% of its proposed fresh issue through a pre-IPO placement, with the amount raised adjusted against the eventual fresh issue. The company is racing against time as the validity of its draft offer document expires on August 21, leaving only a narrow window to complete the pre-IPO placement before the filing lapses, sources said. The move to increase domestic participation also aligns with Zepto’s efforts over the past two years to broaden its Indian shareholder base ahead of the IPO. Foreign investors currently own roughly two-thirds of the company, with the remainder held by the founders and Indian investors. In November 2024, Zepto raised $350 million from investors led by Motilal Oswal’s private wealth arm, alongside family offices linked to the RP-Sanjiv Goenka Group, Mankind Pharma, Cello, Haldiram’s, the Sekhsaria family, Kalyan Jewellers and high-net-worth individuals including Amitabh Bachchan and Sachin Tendulkar. Zepto had initially planned to raise about Rs 8,010 crore through the IPO before reducing the fresh issue and trimming the overall offer size to around Rs 5,106 crore. The company received Sebi’s approval for the issue in April and last raised capital in October 2025 in a funding round led by General Catalyst and US pension fund CalPERS. The company is hopeful that improving its profitability over the coming quarters will strengthen its case for a higher valuation before returning to the public markets.