Zepto IPO could see steep valuation cut: Report

Foreign investors have shown interest in Zepto at a pre-money valuation of around USD 4.5 billion, according to people familiar with the matter, who requested anonymity because the discussions are private. Some domestic institutional investors have valued the company between USD 3 billion and USD 3.5 billion. This is significantly lower than the USD 7 billion valuation Zepto secured during its funding round in October last year.

India’s quick-commerce sector, led by Eternal Ltd.’s Blinkit, has built a strong customer base in urban areas and attracted billions of dollars from global investors. However, investor sentiment has shifted as the focus has moved from rapid growth to profitability. This change is also reflected in rival Swiggy Ltd., whose shares have declined about 29 per cent from their listing price in late 2024.

Zepto is looking to raise up to $850 million through its IPO and is continuing discussions with potential investors, the people said. The final valuation, issue size, and launch timeline may still change.

In the unlisted market, Zepto shares are trading at around Rs 39 apiece, giving the company a valuation of nearly Rs 492 billion ($5.1 billion), according to UnlistedZone.com, a platform for trading shares of private companies. The stock has fallen about 33% since March.

Zepto did not respond to a request for comment.

According to the company’s draft prospectus, the IPO includes a fresh issue of shares worth Rs 80.1 billion ($831 million) and an offer for sale of 113 million shares by existing investors. The proceeds from the fresh issue will be used to expand its dark store network, strengthen technology infrastructure, and support growth initiatives.

Backed by investors such as Nexus Venture Partners, Glade Brook Capital Partners, and StepStone Group, Zepto competes with Amazon’s India business as well as domestic rivals Swiggy, Blinkit, and Tata Group’s BigBasket.

The IPO is being managed by Axis Capital Ltd., Motilal Oswal Investment Advisors Ltd., and the Indian units of Morgan Stanley, HSBC Holdings Plc, and Goldman Sachs Group Inc.