One of India’s leading quick commerce companies, Zepto, filed its updated DRHP on June 8. The company is planning to raise ₹8,010 crore through a fresh issue, along with an offer for sale (OFS) of 11.35 crore shares by existing shareholders.
The company faces direct competition from listed players, Swiggy (Instamart) and Eternal (Blinkit). So, let’s take a closer look at what the updated DRHP reveals about its IPO plans, business model, and SWOT analysis.
How will Zepto use the IPO proceeds?
As per the updated DRHP filed with SEBI, Zepto plans to utilise the ₹8,010 crore of fresh issue proceeds for expanding its dark store network across existing and new geographies and funding lease rentals of current outlets.
The funds will also be allocated to strengthening technology and cloud infrastructure, investing in its subsidiary Zepto Marketplace Private Limited for marketing and brand-building activities, and supporting inorganic growth and general corporate purposes.
The offer for sale by existing investors includes 11.35 crore shares. The selling shareholders are Nexus Ventures VI Holdings LLC, Nexus Ventures VII Holdings LLC, Contrary ZEP Holdings LLC, Razor Ventures Zepto LLC, Kaiser Foundation Hospitals, and Kaiser Permanente Group Trust.
Promoters of Zepto are Aadit Palicha, Kaivalya Vohra, Lazarus Trust, and The Vohra Trust. They will not sell any shares in the IPO, as per the updated DRHP.
What is the business model of Zepto?
Zepto is a quick commerce platform focused on ultra-fast delivery of groceries and daily essentials through a large network of dark stores. The platform offers an average of 46,623 SKUs on its platform, ranging from FMCG products, household electronics, cosmetics, and fruits and vegetables.
The platform operates through a dark store-led supply chain where merchant partners offer FMCG products sourced from manufacturers and brands, and fruits and vegetables sourced from the farmer partner network across India.
Orders are fulfilled through an in-house logistics system that matches demand with delivery partners, digitises payments, and provides visibility into earnings and payouts.
Zepto earns revenue from the sale of goods and services, including warehousing, packaging, and last-mile charges from merchant partners, advertisement revenue from brand partners, and platform commission charges from merchant partners.
The company also earns franchise fees from third-party partners that operate dark stores, platform subscription and convenience fees from users, and procurement and distribution revenue from sales to wholesalers and retailers.
Zepto SWOT analysis: Strengths
Strong order growth and scale expansion
Zepto order volume has grown at a CAGR of 119.5% between FY24 and FY26. Active Transacting Users (ATU) increased from 1.06 crore in FY24 to 4.8 crore in FY26, while orders per day rose from 3.63 lakh to 17.54 lakh in the same period.
The closing count of stores also increased from 337 at the end of March 2024 to 1,139 at the end of March 2026.
Rising revenue from operations and advertising
Revenue from operations increased from ₹4,455 crores in FY24 to ₹22,624 crores in FY26, reflecting a growth of 407.9% in two years.
Advertisement revenue also rose sharply from ₹49 crores to ₹1,636 crores in the same period, highlighting the improving monetisation of platform traffic and brand demand.
Densification-led operating model
Zepto’s densification model improves efficiency by increasing order density within micro-markets, thereby reducing delivery distances and costs. Average distance per order reduced from 2.05 km in FY24 to 1.78 km in FY26.
Expanding product assortment
Product assortment at the dark store geography level expanded from 12,312 SKUs in FY24 to 46,623 SKUs in FY26.
Improving unit economics
Zepto has shown consistent improvement in unit economics. Fixed cost per order declined from ₹80.72 in Q1 FY24 to ₹52.34 in Q4 FY26, while digital marketing cost per order reduced from ₹10.82 to ₹1.01 over the same period.
Integrated technology
Zepto operates an in-house tech stack covering warehousing, workforce, and last-mile delivery systems. These platforms improve forecasting, routing, and real-time visibility, enabling faster and more efficient supply chain execution.
Commenting on Zepto’s strengths, Harsh Thakkar, Research Analyst at SAMCO Securities, said, “The company’s biggest strength lies in its ability to scale rapidly, build a dense dark-store network, and improve operational efficiency while competing against much larger rivals.
Its technology-driven model and expanding product categories position it well to benefit from changing consumer preferences toward convenience-led shopping.”
Zepto SWOT analysis: Weaknesses
Persistent losses and negative cash flows
Zepto is a loss-making company and continued to have negative cash flow from operating activities since its inception. Restated losses increased sharply from ₹1,215 crore in FY24 to ₹5,905 crore in FY26, rising about 386%.
Key subsidiaries, including Kiranakart Wholesale Private Limited and Zepto Marketplace Private Limited, have also reported losses in recent years.
Rising expenses
Total expenses have expanded sharply from ₹5,751 crores in FY24 to ₹29,027 crores in FY26, driven by scale, logistics, and expansion costs. Employee benefits expense also rose from ₹426 crores to ₹1,785 crores, indicating increasing operational and workforce-related costs.
High employee attrition
The business is highly dependent on frontline labour, such as pickers and delivery staff. But there is an attrition rate of 73.22% in FY26, which creates a challenge in workforce stability, increases training costs, and adds operational complexity.
Low entry barriers and easy switching
Asset-light models allow new players to scale quickly, intensifying industry fragmentation. Easy switching by users, merchants, and delivery partners increases pricing pressure and limits differentiation benefits.
Regulatory and legal risks
The company is subject to ongoing regulatory scrutiny, including FEMA-related proceedings involving its promoters and information requests from the Enforcement Directorate (ED). The company has also received CCPA notices related to alleged unfair trade practices and violations of consumer rights.
Inspection and compliance risk
The company has previously been subject to inspections by regulatory authorities regarding storage and hygiene standards, with temporary suspensions of licenses at certain dark stores.
On highlighting the weaknesses, Thakkar mentioned that “the business remains capital-intensive and continues to face profitability challenges. Regulatory developments around gig workers and dark-store operations also remain key risks.”
Zepto SWOT analysis: Opportunities
Structural shift toward digital consumption
India’s digital ecosystem is expanding rapidly, with internet users in the country expected to grow from 835-875 million in CY2025 to 968-1,065 million by CY2030 (as per the Zepto updated DRHP filing). Rising connectivity, supported by 5G and Digital India initiatives, is expected to further accelerate online consumption and platform-based retail adoption.
Shift toward online retail
Organised retail penetration is projected to increase from 22% in CY2025 to 33–36% by CY2030, while online retail is expected to grow at a 21–26% CAGR between CY2025 and CY2030. This reflects the strong structural formalisation of India’s retail sector, with significant headroom for growth.
Rapid expansion of quick commerce
Quick commerce is scaling quickly, rising from 3% of online GMV in CY2022 to 13% in CY2025, and is projected to reach 26–30% by CY2030. The growth is driven by high-frequency and convenience-led grocery consumption patterns across urban India.
Metro cities expansion
In the quick commerce industry, metro cities still present significant untapped potential, with 75–85 million ATUs in quick commerce versus 300–320 million in broader online retail platforms.
Expansion into non-metro markets
The quick commerce model in non-metro cities is projected to expand at an even faster pace. The non-metro penetration is projected to increase by 25-39 times between CY2024 and CY2030, compared to 7-10 times in metro cities.
Category expansion
Within the quick commerce market, non-grocery categories have increased their share of GMV from less than 5% in CY2022 to around 29% in CY2025 and are expected to further rise to 39–44% by CY2030. Expansion beyond groceries into categories such as personal care, electronics, pharmaceuticals, and fashion presents a significant growth opportunity.
On Zepto opportunities, he says, “the opportunity is significant, given the low penetration of quick commerce in India and the potential expansion into new cities and categories.”
Zepto SWOT analysis: Threats
Macroeconomic and inflationary pressure
Economic slowdowns and higher inflation can reduce household purchasing power and discretionary spending. While the demand for essential products remains stable, weaker consumption trends may still impact order frequency.
Intensifying competition
The sector is highly competitive, with players including Zepto, Blinkit (Eternal), and Instamart (Swiggy), alongside new entrants like Amazon Now and Flipkart Minutes in instant delivery. Rising competition increases pressure on pricing, acquisition costs, and service differentiation.
Dependence on the gig workforce
The model relies heavily on gig delivery partners, making workforce availability critical to operations. Competition from ride-hailing and logistics platforms can affect partner retention and increase fulfilment costs.
Regulatory and compliance risks
The sector operates under evolving regulatory frameworks, including labour laws, municipal regulations, and the classification of gig workers.
Reputation and brand risk
In the past, Zepto has faced negative media and social media attention related to its operations, workforce practices, and products sold by third-party partners.
On threats, he emphasised that, “Competition from Blinkit, which has shown improving profitability, and Swiggy, Instamart, which continues to invest aggressively for market share, could keep pricing and margins under pressure.”
What should investors expect from Zepto’s IPO?
Thakkar mentioned that “Zepto’s IPO represents a bet on the long-term growth of India’s quick commerce market rather than a near-term profitability story.
Overall, Zepto appears well-positioned to benefit from industry growth, but the attractiveness of the IPO will ultimately depend on valuation and its ability to demonstrate a sustainable path to profitability,” he said.
