Zepto IPO: Quick Commerce Leader Plans $800 Million-$1 Billion Listing

Zepto IPO, the rapidly growing quick commerce startup, is gearing up for an Initial Public Offering (IPO) with a target size of $800 million to $1 billion. The company, co-founded by Aadit Palicha and Kaivalya Vohra in 2020, has disrupted the grocery delivery space with its 10-minute delivery model. As Zepto scales its operations and expands into new segments, its IPO is set to be one of the most anticipated listings in India’s tech ecosystem.

Zepto IPO Details

Zepto’s IPO is expected to be a mix of primary capital infusion and an Offer for Sale (OFS), where existing investors will offload shares. The company is planning to raise over $800 million, significantly increasing from its initial $450 million target. Below are the key details of the Zepto IPO:

Zepto’s Growth and Market Position

Expanding Dark Stores and Daily Orders

Zepto has aggressively expanded its operations, surpassing 900 dark stores across India and targeting 1,000 stores in the coming months. The company processes 1.1 to 1.3 million orders daily, showcasing strong customer demand.

Beyond groceries, Zepto is diversifying its product offerings, generating Rs 200 crore per month from non-grocery items like electronics, apparel, and general merchandise. This expansion aligns with its goal of improving profit margins and sustaining long-term growth.

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Domestic Shareholding and Business Restructuring

Zepto aims to increase its domestic shareholding to at least 40% before the IPO. To facilitate this, the company is merging its Singapore parent entity with an Indian unit, securing approvals from the National Company Law Tribunal (NCLT) for the transition. This move will allow Zepto to comply with Indian listing regulations and attract more domestic investors.

Competitive Landscape and Financial Performance

Zepto IPO vs. Blinkit and Swiggy Instamart

The quick commerce sector is highly competitive, with Zepto IPO going head-to-head with Blinkit (owned by Zomato) and Swiggy Instamart. Despite being a late entrant, Zepto has captured a significant market share.

• Gross Sales: Zepto reached $3 billion in gross sales, compared to Blinkit’s $3.7 billion.
• Operational Cities: Expanded from 7 cities in 2023 to 35 in 2024.
• Dark Stores Growth: Increased from 300 stores in 2023 to 900+ in 2024.
• Investment in Growth: Zepto spent Rs 1,000–1,100 crore in the last three months to strengthen its position in the market.

Funding and Valuation

Zepto IPO has raised $1.6 billion across nine funding rounds, backed by investors like General Catalyst, StepStone Group, and Lightspeed Venture Partners. In its latest funding round (August 2024), the company was valued at $5 billion. Unlike Blinkit and Instamart, which are backed by corporate giants, Zepto’s funding comes primarily from financial investors.

Profitability and Future Outlook

Zepto’s IPO business model prioritizes rapid scaling, but profitability remains a challenge. The company reported an operating revenue of Rs 2,024 crore in FY23 but incurred a net loss of Rs 1,272 crore. However, Zepto IPO aims to achieve EBITDA profitability by September 2024, as new dark stores become profitable within nine months.

Future Plans and Expansion Strategy of Zepto

Scaling Beyond Groceries

Zepto IPO plans to expand its product categories, moving into high-value segments like electronics and home goods. This diversification will help increase average order values (AOV) and improve profitability.

Market Opportunity

Quick commerce currently accounts for just 7% of India’s total addressable market (TAM), estimated at $45 billion. Zepto’s aggressive expansion into Tier-2 and Tier-3 cities could significantly boost its market penetration in the coming years.

IPO Timing and Potential Impact

While Zepto has not officially announced its IPO date, its strong financial backing and rapid growth trajectory make it a highly anticipated listing. The company’s ability to achieve positive EBITDA before the IPO could further enhance investor confidence.

Conclusion

Zepto’s IPO is set to be a landmark event in the Indian startup ecosystem. With its ambitious fundraising plans, strong market positioning, and innovative quick commerce model, Zepto is well-positioned for long-term success. Investors will be closely watching the company’s path to profitability and execution of its expansion strategies as it prepares for public listing.

Stay tuned for updates on Zepto’s IPO as more details emerge!

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