Zepto’s Rapid Growth Raises Valuation Concerns as Losses Mount

Indian Quick-Commerce Startup Zepto Plans $1 Billion IPO

Zepto, an Indian quick-commerce startup, has announced its intention to go public with an initial public offering that could reach a valuation of approximately $1 billion. This move puts Zepto, one of Y Combinator’s significant investments outside the U.S., on track to enter the public markets.

The company’s recent filing provides insights into how Zepto, a highly anticipated startup in India, aims to sustain its rapid growth post-listing. Zepto saw a remarkable 151% year-over-year increase in advertising revenue, reaching ₹16.4 billion (around $171 million) in fiscal 2026, surpassing its 104% growth in operating revenue to ₹115.5 billion (approximately $2.4 billion).

While Zepto’s core business remains centered around grocery deliveries, the substantial growth of its advertising division indicates a strategic shift in revenue generation. This approach mirrors Amazon’s successful model of leveraging its marketplace for lucrative ad sales, targeting the same merchants operating on its platform.

Founded in 2021 by Aadit Palicha and Kaivalya Vohra, former Stanford students, Zepto has swiftly emerged as one of India’s fastest-growing startups, competing with established players like Zomato-owned Blinkit and Swiggy’s Instamart in the competitive quick-commerce sector. Major players such as Amazon and Walmart-backed Flipkart have also intensified their presence in this segment in recent times.

Despite facing fierce competition, Zepto continues to attract new customers and witness a surge in orders. In fiscal 2026, the company processed over 640 million orders, nearly doubling from the previous year, while its annual transacting users reached close to 48 million. Even with an expanded network of 1,139 stores, Zepto observed a rise in orders per store, indicating a growing demand alongside its expanding footprint.

However, this growth comes with financial challenges as Zepto remains in a loss-making position, reporting a net loss of ₹59.1 billion (about $617.36 million) in fiscal 2026, compared to ₹47.0 billion (around $492.45 million) in the previous year. The company acknowledges the possibility of continued losses and the inability to sustain historical growth rates in its filing, a common disclosure for venture-backed firms seeking public investments before achieving profitability.

Zepto aims to raise up to ₹80.1 billion (approximately $837.41 million) through a fresh share issue in its IPO. The offering will also include an offer-for-sale of up to 113.5 million shares by existing investors like Nexus Venture Partners, Contrary, and Razor Ventures, with the final size contingent on the pricing of the offering. Additionally, Zepto may secure up to ₹16.02 billion (around $167 million) from investors through a pre-IPO placement before the listing.

The upcoming listing represents a significant milestone for Zepto’s early supporters. In its most recent funding round in October, the company was valued at $7 billion, with investors including Y Combinator, Lachy Groom, Nexus Venture Partners, StepStone, Glade Brook, and Lightspeed.

Notably, some key shareholders such as funds affiliated with Y Combinator, Lightspeed, StepStone, Groom, and Glade Brook have opted not to participate in the IPO’s offer-for-sale, choosing to retain their stakes as Zepto prepares for its market debut. This decision reflects the uncertainty surrounding Zepto’s public-market valuation, with certain mutual funds and family offices expressing valuations below the company’s last private funding round.

The filing also reveals that Zepto’s founders were summoned by India’s enforcement agency for information related to foreign investments, shareholding structure, and compliance with foreign-exchange laws. The founders cooperated with the agency by providing the requested details, and Zepto has not received any further communication from the regulator. However, the company acknowledges the potential for future inquiries, investigations, or penalties.

Zepto’s planned listing signifies the culmination of extensive preparations for a domestic market debut. Last year, the company shifted its legal headquarters from Singapore to India, aligning with a trend among startups restructuring their entities as local public markets become increasingly attractive for tech listings.

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