Zepto, the rapidly growing quick-commerce platform founded by Aadit Palicha and Kaivalya Vohra, is preparing for its Initial Public Offering (IPO) in 2025. With its aggressive growth strategy, innovative business model, and strong investor backing, Zepto has emerged as one of the key players in the Indian e-commerce space. Here’s everything you need to know about Zepto’s IPO and what the company has achieved so far.
About Zepto
Founded in 2021 by Stanford dropouts Aadit Palicha and Kaivalya Vohra, Zepto operates on a quick-commerce model that promises to deliver groceries and essentials in under 10 minutes. The company leverages advanced data analytics and strategically located dark stores (micro-warehouses) to ensure lightning-fast deliveries. Zepto’s rise in the market has been impressive, overtaking competitors like Swiggy’s Instamart and Zomato’s Blinkit to become the second-largest player in the quick-commerce market by the end of 2024.
Zepto’s Growth & Financials
Zepto’s financial trajectory has been marked by rapid revenue growth, bolstered by strong investor confidence and the growing demand for hyper-local deliveries. The company has consistently increased its market share and revenues year after year, despite challenges related to profitability.
As of July 2024, Zepto’s valuation stands at $5 billion. The company reported a 120% increase in operating revenue, with total revenue reaching ₹4,498 crore in FY24. Their Gross Merchandise Value (GMV) has surpassed ₹1.5 billion as of 2024, signaling the company’s strong presence in the market.
Zepto’s Key Financials
| Particulars | FY 2023 | FY 2024 |
| Total Revenue | ₹2,077 crore | ₹4,498 crore |
| Net Loss | ₹1,272 crore | ₹1,248 crore |
| EBITDA Margin | -55.95% | -23.81% |
| Expenses per ₹ of Revenue | ₹1.65 | ₹1.29 |
| ROCE | -145.6% | -119.3% |
| Cash & Bank Balances | ₹630.7 crore | ₹692.3 crore |
| Current Assets | ₹1,140.8 crore | ₹1,398.1 crore |
Despite the impressive revenue figures, Zepto remains unprofitable with a net loss of ₹1,248 crore in FY24. However, the company has made significant strides in reducing its losses, improving its EBITDA margin from -55.95% in FY23 to -23.81% in FY24.
Zepto’s Business Model
Zepto operates under a B2B model, acting as a technology intermediary between sellers, dark store operators, and delivery partners. The company uses a tech-driven approach to anticipate demand in real-time, enabling efficient inventory management and order fulfillment. Zepto’s business model centers around its ability to offer quick deliveries—typically within 10 minutes—by setting up dark stores in high-demand urban locations.
Expansion Plans & Zepto Café
Zepto’s expansion plans are ambitious. The company intends to extend its presence from over two dozen cities to more than 50 cities in the coming months. To fuel this growth, Zepto plans to scale its dark store network from 650 stores in FY24 to 700 in the near future. The company also aims to diversify its product offerings, introducing categories like consumer electronics, beauty products, apparel, and general merchandise.
One of Zepto’s standout offerings is its Zepto Café, launched in 2022. The Café specializes in quick food and beverage deliveries, contributing significantly to the company’s revenue. Zepto Café has seen rapid growth, with over 100 new outlets opening each month and an annual revenue of ₹160 crore. This division is projected to reach ₹1,000 crore in annual revenue by 2026.
Zepto’s IPO Plans
Zepto is gearing up for its IPO by March-April 2025, with a goal of raising between ₹450-500 million. The company has already secured approvals to shift its base from Singapore to India, a crucial step ahead of the listing. The company plans to appoint investment bankers, independent directors, and finalize the IPO size in an upcoming board meeting. The exact opening date for the IPO will be announced later.
Strengths & Risks of Zepto’s IPO
Strengths:
- Rapid Growth: Zepto has achieved 116.6% growth year-on-year, with revenue growing from ₹2,077 crore in FY23 to ₹4,498 crore in FY24.
- Market Share: The company now holds a 29% market share in the quick-commerce space, surpassing competitors like Instamart.
- Expansion: Zepto is on track to expand its dark store network and plans to double its reach by opening new stores in Tier 2 and Tier 3 cities.
- Improved Margins: The company has significantly reduced its EBITDA margin loss, from -55.95% in FY23 to -23.81% in FY24.
- Diversified Offerings: Zepto Café’s rapid growth, along with plans to enter new product categories, strengthens Zepto’s long-term growth prospects.
Risks:
- Unprofitability: Despite rapid revenue growth, Zepto remains unprofitable, posting a net loss of ₹1,248 crore in FY24.
- High Operational Costs: Maintaining its dark stores, warehouses, and technology stack is costly, with expenses reaching ₹5,747 crore in FY24.
- Intense Competition: The quick-commerce market is highly competitive, with established players like Blinkit and Instamart posing constant threats.
- Regulatory Risks: Potential changes in labour laws could increase operational costs and impact profitability.
The Indian E-Commerce Market Outlook
The Indian online grocery market is poised for massive growth. Valued at USD 11.4 billion in 2024, it is expected to reach USD 96.3 billion by 2033, with a CAGR of 25.38% from 2025 to 2033. As internet access, smartphone penetration, and urbanization continue to rise, the quick-commerce space, including Zepto, stands to benefit immensely.
The broader Indian e-commerce market is projected to grow from USD 123 billion in 2024 to USD 292.3 billion by 2028, creating huge opportunities for quick-commerce players like Zepto to expand their customer base and product offerings.
Conclusion
Zepto’s IPO marks a crucial step in the company’s ambitious growth trajectory. With strong financial backing, rapid expansion plans, and a tech-driven approach to business, Zepto is set to become a dominant force in the Indian e-commerce and quick-commerce markets. While the company still faces challenges in achieving profitability, its impressive growth, market share, and future plans make it an exciting IPO prospect.
Source:
https://zerodha.com/ipo/391072/zepto/
