Zepto IPO shrinks 20% as valuation drops to $3.5-4B

Key Takeaways

• Zepto is reducing its IPO fresh capital raise from $850 million to $650-700 million, a 20% cut
• Expected valuation drops to $3.5-4 billion, roughly half the $7 billion from its October 2025 funding round
• Domestic mutual funds pushed for lower pricing amid cash burn concerns and market volatility

Zepto is cutting the size of its initial public offering by roughly 20%, according to three people familiar with the matter. The quick commerce company now plans to raise $650-700 million in fresh capital instead of the originally planned $850 million. More striking: the expected valuation has dropped to $3.5-4 billion, roughly half the $7 billion it commanded just eight months ago in its October 2025 funding round led by US pension fund Calpers.

The price band announcement is expected within seven to eight days. SEBI rules require companies to refile their draft prospectus if the issue size changes by more than 20% from the original estimate, which explains why Zepto is cutting exactly at that threshold.

Why are domestic investors pushing back on Zepto's valuation?

Domestic mutual funds are the primary source of resistance. Under SEBI norms, 40% of the anchor book is reserved for domestic institutional investors. These funds have pushed hard for what one person called "rationalised pricing."

Their concerns center on two factors. First, market volatility has made institutional buyers more conservative across the board. Second, Zepto's cash burn rate remains a question mark. The company reported an adjusted EBITDA loss in its confidential IPO filing. For context, Swiggy's Instamart recorded losses of Rs 3,500 crore, while Blinkit posted losses of Rs 277 crore.

Zepto had Rs 5,681 crore in cash as of March 31, according to its draft prospectus. Brokerages have interpreted this as evidence the company needs fresh capital, which weakens its negotiating position with IPO investors.

The competitive pressure behind the timing

Zepto is going public while trailing only Blinkit in order volumes among quick commerce players. But analysts and industry executives have flagged a problem: the company's aggressive pricing strategy comes at the expense of monetization. Put simply, Zepto is buying market share, not earning it.

The competitive field is crowded. Amazon, Flipkart, Tata Digital-backed BigBasket, and Reliance Retail's JioMart all operate in the segment. Each has deeper pockets than Zepto and can sustain price wars longer.

Founded in 2021 by Stanford dropouts Aadit Palicha and Kaivalya Vohra, Zepto became one of the youngest unicorns globally. The company is backed by Nexus Venture Partners, Glade Brook, Motilal Oswal, Lightspeed, and General Catalyst. Nexus is offloading a small stake through the offer-for-sale component of this IPO.

What does a 50% valuation cut signal for Indian tech?

The drop from $7 billion to $3.5-4 billion is not unique to Zepto. It reflects a broader correction in how public market investors value growth-stage tech companies compared to private market valuations. The gap between what late-stage VCs paid and what mutual funds will pay has widened significantly.

This matters for other Indian startups eyeing public listings. If Zepto's IPO prices at the lower end, it sets a benchmark. Companies that raised at high private valuations may face similar haircuts when they approach public markets.

Axis Capital, Morgan Stanley, Goldman Sachs, Motilal Oswal, HSBC, JM Financial, and IIFL Capital are the merchant bankers handling Zepto's IPO. The company did not respond to queries about the valuation cut.

Frequently Asked Questions

How much is Zepto's IPO expected to raise?

Zepto now plans to raise $650-700 million in fresh capital, down from the originally planned $850 million. The issue also includes a small offer-for-sale component from existing investors like Nexus Venture Partners.

What is Zepto's expected IPO valuation?

Sources indicate Zepto's IPO valuation will be $3.5-4 billion, roughly half the $7 billion valuation from its October 2025 funding round led by Calpers.

When will Zepto announce its IPO price band?

The company is expected to announce its price band within seven to eight days, according to people familiar with the matter.

Why did Zepto reduce its IPO size by exactly 20%?

SEBI rules require companies to refile their draft prospectus if the issue size changes by more than 20% from the original estimate. By cutting at exactly 20%, Zepto avoids refiling delays.

Who are the bankers handling Zepto's IPO?

Axis Capital, Morgan Stanley, Goldman Sachs, Motilal Oswal, HSBC, JM Financial, and IIFL Capital are the merchant bankers for Zepto's IPO.

Source: Tech-Economic Times / ET

Norges, Motilal Oswal to Lead Zepto's Anchor Book as IPO Valuation Firms Up at $5.1 Bn

The new article provides specific valuation figures: $4.5 Bn pre-money and $5.1 Bn post-money valuation, which differs from the $3.5-4B mentioned in the original headline. It also reveals key anchor investors: Norway's sovereign wealth fund Norges and Motilal Oswal are expected to account for 40-45% of Zepto's anchor book. The article adds context about profitability concerns and geopolitical uncertainty affecting the valuation.