Zepto IPO soon! Anand Rathi flags profitability risks despite growth potential, check unlisted share price

Quick commerce player Zepto is set to launch its initial public offering (IPO) in July. The issue offers investors a chance to participate in one of India's fastest-growing consumer internet businesses, but the company still faces high execution risks as competition in quick commerce intensifies and profitability remains unproven, according to a report by Anand Rathi Share and Stock Brokers.

The brokerage said Zepto has built its position as India's second-largest quick commerce player through an Every Day Low Prices strategy that prioritised order frequency over basket size. It removed platform fees, offered free delivery on orders above Rs 99 and sharply cut customer charges after a major funding round in late 2025, which helped daily order volumes rise significantly.

Zepto confidentially filed draft papers in late December and received observations from the capital markets regulator SEBI on May 10. The company is likely to raise $1 billion from its IPO (Rs 9,500 crore), which includes a  a fresh share sale of Rs 8,010 crore and an offer-for-sale (OFS) of up to Rs 11,34,66,566 equity shares with a face value of Rs 5 each.

Last heard, it trading at Rs 38-40 in the unlisted market, while the stock was available around Rs 42 a month ago. Interestingly, the stock was exchanging hands at Rs 50-52 in March 2026. To recall, Zepto was valued at $7 billion in its last $450 million funding round in October. 

According to Anand Rathi, Zepto handled about 2.8 million daily orders in Q4FY26, compared with around 3.1 million for Blinkit and 1.2 million for Swiggy Instamart. The brokerage said Zepto's average order value remained materially lower than that of its peers because the company focused on encouraging repeat purchases instead of raising basket sizes.

The report said this model still requires much higher order throughput for profitability. While Blinkit and Instamart can achieve adjusted EBITDA breakeven at around 1,500-1,800 orders per store per day, Zepto needs close to 3,000 daily orders per store, underlining the difficulty of protecting margins while pursuing rapid growth.

Anand Rathi said Zepto has expanded strongly over the past two years. Between FY24 and FY26, it more than tripled its dark store network to over 1,100 locations, while annual order volumes grew at a compound annual growth rate of nearly 120 per cent. Revenue from operations also increased rapidly during this period, supported by strong growth in advertising income. 

Zepto is a quick commerce platform that delivers groceries, daily essentials and other household items to its customer within 10-15 minutes through its mobile applications. It followed an inventory-led model. It generates revenue through product margins, convenience fee, advertising, promotions and subscriptions. 

Even so, the brokerage said profitability remains a work in progress. Zepto has reduced its adjusted EBITDA loss per order through lower marketing spends and better operating efficiency, but it continues to report sizeable overall operating losses.

The brokerage said Zepto's low-price strategy has lifted user engagement, but it has also left the platform structurally dependent on high order frequency. It added that acquiring more customers could become harder as Blinkit, Swiggy Instamart, Amazon, Flipkart Minutes and JioMart push aggressive expansion plans.

Anand Rathi said Zepto plans to use IPO proceeds mainly to expand its dark store network, fund lease rentals for existing stores and strengthen technology and cloud infrastructure, with nearly 1,900 additional dark stores expected to be added across existing and new markets.

Zepto, which is likely to get listed in July, is backed by seasoned celebrity names like Legendary cricketer Sachin Ramesh Tendulkar and Bollywood actor Abhishek Bachchan, son of Amitabh Bachchan. Even Dalal Street veterans like Ramdeo Aggrawal, Motilal Oswal and Madhusudan Kela have also invested in the company. 

Anand Rathi said investors seeking exposure to India's quick commerce opportunity may find Blinkit-parent Eternal a relatively safer option because of larger scale, positive adjusted EBITDA and broader ecosystem.  Zepto's IPO offers an avenue to trade hyper-growth, high cash burn, competitive pressure, sustained execution and the path to profitability will remain key factors for investors after the listing.