Zepto's IPO Plans Reset as Investors Seek Lower Valuation

Quick commerce firm Zepto has begun discussions with investors to launch its initial public offering (IPO) at a post-money valuation of about $3 billion (Rs 29,000 crore) — less than half the roughly $7 billion (Rs 60,000 crore) valuation it commanded just nine months ago. The sharp reset follows resistance from large domestic institutional investors to the pricing the company had initially sought, people familiar with the matter said. The company is targeting a pre-money valuation of around $2.5 billion (Rs 24,000 crore) for the issue, the people added. At this valuation, Zepto is expected to raise around Rs 5,000 crore through a primary issue, along with a relatively small offer-for-sale (OFS) component. The anchor book is likely to be around Rs 2,300 crore, while the institutional portion is expected to be about Rs 1,530 crore. The high-net-worth individual (HNI) segment could account for Rs 766 crore, with the retail portion pegged at Rs 511 crore, the people said. The final structure of the IPO will depend on investor feedback, they added. Led by co-founder and chief executive officer Aadit Palicha, Zepto received the Securities and Exchange Board of India (Sebi)’s approval for its IPO in April. The company last raised $450 million in October 2025 from investors, including US pension fund CalPERS, at a valuation of $7 billion. The proposed issue is significantly smaller than what Zepto had outlined in its updated draft red herring prospectus (UDRHP) filed last month. The filing proposed a fresh issue of up to Rs 8,010 crore, along with an offer for sale of up to 113.47 million shares by existing investors, including Nexus Ventures, Contrary, Razor Ventures and entities linked to Kaiser Permanente. The valuation reset comes after domestic mutual funds and insurance companies pushed back against Zepto’s expectations, seeking a valuation 30-40% lower than the $4-5 billion range the company had already indicated it was willing to accept — a sharp markdown from its $7-billion peak. At the centre of the disagreement is the valuation benchmark. According to the people, Zepto wanted its IPO to be valued in line with listed peers Eternal and Swiggy. However, investors argued that the comparison was inappropriate because, unlike its rivals, Zepto does not operate a food delivery business, which accounts for a significant portion of their revenues and market valuations. Zepto’s business is focused entirely on quick commerce, including groceries, electronics and other daily essentials. Investor caution towards new-age technology listings has also intensified following the weak post-listing performance of several recent IPOs. Swiggy, which debuted in November 2024, is still trading about 35% below its IPO price of `390. Bankers and one of Zepto’s key investors are now working to bridge the valuation gap by persuading institutional investors to meet the company halfway. They have also stepped up efforts to secure commitments from high-net-worth individuals and large family offices, the people said. Zepto did not respond to an emailed request for comment until the time of going to press.