Inside Zepto’s $1bn IPO: Revenue surge, mounting losses, CAC pressures, ED cloud

When Zepto founders Aadit Palicha and Kaivalya Vohra launched the company in 2021, the idea of delivering groceries in minutes was still viewed by many as an expensive experiment. Five years later, the start-up is preparing for a roughly $1.1 billion (Rs 9,500 cr) Initial Public Offering (IPO), betting that investors will look beyond its mounting losses and buy into the promise of India's fast-growing quick-commerce market.

The updated draft red herring prospectus (UDRHP) paints a picture of a company growing at breakneck speed. Revenue from operations more than doubled to Rs 22,624 crore in FY26 from Rs 11,109 crore a year earlier and has expanded nearly 5X from Rs 4,454 crore in FY24. The scale-up underlines how deeply quick commerce has penetrated urban India.

Yet, the filing also reveals the cost of winning the quick-commerce race.

Losses widened to Rs 5,905 crore in FY26, up from Rs 4,699 crore in FY25. While revenue growth remains impressive, the company continues to spend heavily on expanding its dark-store network, strengthening logistics infrastructure and acquiring customers in an intensely competitive market dominated by rivals such as Blinkit and Instamart, both under-listed entities.

The cost pressures are evident across key operating metrics. Delivery and handling expenses surged more than 90% to Rs 3,046 crore during FY26 as Zepto scaled its operations and fulfilled a growing number of orders across cities with zero handling fees at a minimum spend. Advertising and promotional expenses also rose to Rs 1,389 crore, reflecting the company's continued investment in growth and customer acquisition amid an intensifying quick-commerce battle.

There are, however, early signs of operating leverage, as per the company, as it states it has "unlocked operating leverage" through in-house technology and operational excellence initiatives. Adjusted EBITDA per order improved from negative Rs 95.84 in the quarter ended June 2023 to negative Rs 59.40 in the quarter ended March 2026. For FY26, adjusted EBITDA per order stood at negative Rs 78.75 compared with negative Rs 136.15 in FY25, suggesting that each transaction is becoming less loss-making as order density improves.

Zepto's expense-to-earnings ratio declined to 1.28 in FY26 from the previous year, while return on capital employed (ROCE) remained negative at 74.8 per cent, and EBITDA margin stood at negative 23.18 per cent. The company appears to be moving towards operating efficiency even as it continues to prioritise growth.

Beyond the financials, the prospectus highlights a regulatory overhang. According to the filing with market regulator SEBI, founders Aadit Palicha and Kaivalya Vohra received summons from the Enforcement Directorate (ED) in April this year. The summons sought information relating to foreign and overseas investments, audited financial statements since FY21, shareholding patterns, loans and guarantees, income tax returns, bank account details, immovable properties, and a note on the company's business model. While the company has stated that it is cooperating with authorities, the disclosure is likely to attract investor attention during the IPO roadshow, particularly at a time when regulators are scrutinising startup structures and cross-border transactions more closely.

For public market investors, Zepto's IPO presents a familiar new-age technology dilemma. The company has demonstrated an ability to scale rapidly and capture consumer demand, but profitability remains elusive. The central question is whether improving unit economics can eventually offset the heavy investments required to sustain growth.