Zepto Puts IPO Plans On Hold

SUMMARY

Zepto will not go to IPO this year, even if it files draft red herring prospectus

The company is looking to reduce its cash burn and improve its profit profile

In April, it renamed its registered entity from Kiranakart Technologies Private Limited to Zepto Private Limited

Quick commerce major Zepto has reportedly postponed its initial public offering (IPO) plans by a year and now plans to hit the bourses in 2026.

A Moneycontrol report, citing sources close to the matter, said that the company is looking to reduce its cash burn and improve its profit profile.

They further added that even if Zepto files its draft red herring prospectus (DRHP) in the coming months, it is not going to IPO this year.

Inc42 has reached out to Zepto for comments on the development. The story will be updated based on its response.

In the run-up to IPO plans, Zepto reportedly renamed its registered entity from Kiranakart Technologies Private Limited to Zepto Private Limited in April.

Setting its IPO plans in motion, the quick commerce major, earlier this year, shifted its domicile back to India from Singapore.

Previously, it was also reported that the company was holding discussions with a clutch of domestic and global merchant bankers, including Morgan Stanley and Goldman Sachs, for a $800 Mn to $1 Bn IPO.

The company’s move to shelve its public listing plan this year comes on the back of several media reports questioning high cash burns at Zepto.

Zepto’s Cash Burn Hearsay

Earlier this year, Zomato’s founder Deepinder Goyal in an interview said that Zepto accounts for more than half of the quarterly cash burn of the quick commerce industry, which is estimated to be around 5,000 Cr.

In response, Zepto’s founder Aadit Palicha took to his LinkedIn handle to refute the claims.

On the financial front, Zepto recorded a 2X jump in its consolidated revenue to INR 4,454.52 Cr in the fiscal year 2023-24 (FY24). The startup’s operating revenue jumped 120% during the year under review from INR 2,025.70 Cr in FY23.

However, Zepto could only reduce its cash burn marginally by 2% to INR 1,248.64 Cr in the fiscal under review from INR 1,271.84 Cr in FY23.

Besides, the company was also pushing to increase its domestic shareholding by pushing its existing investors to offload stakes worth $250 Mn. Last month, Zepto also brought Motilal Oswal’s founders Motilal Oswal and Raamdeo Agrawal to its cap table through a $100 Mn secondary deal.

While the company continues to move forwards with its IPO preparations, several instances have raised questions about its operations.

Earlier this week, the Food and Drug Administration (FDA) revoked the food business licence of Zepto parent’s warehouse in Mumbai’s Dharavi, citing serious food safety violations at the premises.

The inspection revealed violations such as fungal growth on food, expired products mixed with fresh goods, and improper storage near stagnant water. The warehouse has been suspended, and Zepto is working with authorities to rectify the issues.

Besides, the company has also halted operations of its quick food delivery arm Zepto Cafe in multiple small cities including Agra, Chandigarh, Meerut, Mohali and Amritsar. The startup confirmed the development and said that operations have been halted at 44 warehouses to address some supply chain challenges.