Zepto (Kiranakart Technologies Private Limited)
Issue Structure & OFS vs Fresh Capital Split
| Offering Parameter / Tranche | Allocation & Value | % of Gross Issue | Strategic Mandate / Terms |
|---|---|---|---|
| Fresh Issue (Primary Growth Capital) | ₹8,010.00 cr (₹80,100 million) fresh issue. | 50.0% | Balance sheet equity expansion directly fueling capex, debt repayment & operations |
| Offer for Sale (OFS - Insiders) | OFS of up to 113,466,566 equity shares. Value in ₹ is represented as [●] as the price band is not yet determined. | 50.0% | Secondary liquidity realization for existing promoters & early institutional funds |
| Gross Total Issue Size | ₹8,010.00 Cr | 100.0% | Aggregate primary market capital raising at upper price band |
| Net Proceeds Reaching Company | The company receives the Fresh Issue proceeds of ₹8,010.00 cr (₹80,100 million) minus Fresh Issue expenses. Net proceeds are represented as [●] in the DRHP as the price band and expenses are not finalized. | - | Net growth funds after deducting book building issue & underwriting expenses |
| Anchor Investor Allocation Tranche | ₹2,403.00 Cr (Up to 30% of Issue) | Up to 30.0% | Reserved anchor allotment tranche for institutional Qualified Institutional Buyers (QIBs) |
| Pre-IPO WACA Benchmark | WACA of primary issuances in the last 18 months is ₹37.74 per share. The IPO price band is represented as [●], so the markup cannot be determined yet. | Weighted average cost of acquisition for promoters & early funds | |
| Selling Shareholders & Dilution | Selling shareholders are: Nexus Ventures VI Holdings LLC (57.36M shares), Nexus Ventures VII Holdings LLC (30.40M shares), Contrary ZEP Holdings LLC (7.80M shares), Razor Ventures Zepto LLC (9.36M shares), Kaiser Foundation Hospitals (4.39M shares), and Kaiser Permanente Group Trust (4.16M shares). No promoters are selling. | ||
| Intermediary / Regulatory Entity | Entity Name / Details | Statutory Function & Status |
|---|---|---|
| Book Running Lead Managers (BRLMs) | SEBI Registered Merchant Bankers / BRLMs | Issue pricing, underwriting, book building & institutional roadshows |
| Registrar to the Issue | SEBI Category-I Registrar | Allotment finalization, Demat share transfer & ASBA refund processing |
| Proposed Listing Exchanges | NSE / BSE | Trading segments, ticker assignment & continuous disclosure compliance |
| Regulatory Prospectus Stage | DRHP / RHP Filed | SEBI ICDR compliance review & exchange in-principle listing approval |
Revenue Breakdown, Product Mix & Customer Concentration
| Product / Operating Segment | Share (%) | Value / Channel |
|---|---|---|
Sale of Traded Goods (Quick Commerce Dark Stores) | ₹17,587.92 Cr | |
Marketplace Commission & Platform Delivery Fees | ₹3,212.55 Cr | |
Brand Advertising & Promotional Solutions (Zepto Ads) | ₹1,823.11 Cr |
| Market Segment / Customer Concentration Tier | Share (%) | Reported Value | Concentration & Risk Profile |
|---|---|---|---|
| Top 8 Metro Tier-1 Clusters (Mumbai, NCR, BLR, HYD, etc.) | 88.0% | ₹19,908.75 Cr | High order density & repeat cohort metrics |
| Tier-2 Emerging Cities Expansion | 12.0% | ₹2,714.83 Cr | Rapid dark store setup in tier-2 growth hubs |
| Geographic Sales Mix | Domestic India: 100.0% | ₹22,623.58 Cr | Pan-India 10-minute quick delivery |
| Customer Concentration | Top 1: <0.01% | Top 5: <0.05% | B2C Retail | Over 20M+ registered transacting consumers |
Capital Allocation (Where the Fresh Money Goes)
| Object of the Offer / Proposed Expenditure | Amount (₹ Cr) | % of Fresh Issue | Deployment Timeline / Purpose |
|---|---|---|---|
| Expansion of Dark Store Network (New Micro-Warehouses) | ₹1,628.98 Cr | 20.3% | FY27-FY28 Store Densification |
| Technology & Micro-Fulfillment Automation Infrastructure | ₹750.00 Cr | 9.4% | 10-Min dispatch algorithms & robotics |
| Working Capital, FMCG Inventory & Vendor Payments | ₹3,628.52 Cr | 45.3% | Inventory scaling across 50,000+ SKUs |
| General Corporate Purposes (GCP) | ₹2,002.50 Cr | 25.0% | Capped at statutory 25% |
| Total Fresh Growth Capital | ₹8,010.00 Cr | 100.0% | Direct Balance Sheet Inflow |
3-Year Audited Financial Health & Margins
| Audited Metric / Line Item | FY24 | FY25 | FY26 | 3-Yr CAGR |
|---|---|---|---|---|
| Revenue from Operations | ₹4,454.52 Cr | ₹11,109.95 Cr | ₹22,623.58 Cr | +125.4% |
| Operating EBITDA | -₹1,118.82 Cr (-25.1%) | -₹4,589.34 Cr (-41.3%) | -₹5,248.80 Cr (-23.2%) | Margin Expanding |
| Profit / Loss After Tax (PAT) | -₹1,214.79 Cr | -₹4,699.71 Cr | -₹5,905.19 Cr | Hypergrowth Phase |
| Operating Cash Flow (CFO) | -₹1,097.88 Cr | -₹4,624.83 Cr | -₹3,462.44 Cr | Burn narrowing |
| Debt-to-Equity (D/E) | 0.00x | 0.00x | 0.00x | Zero Debt (Lease ₹2,710 Cr) |
| Working Capital Cycle | Cash Cycle: -12 Days | Cash Cycle: -14 Days | Cash Cycle: -18 Days | Negative WC Model |
Governance, Lock-in & Litigation Review
| Shareholder Category / Promoter Group | Pre-IPO Holding (%) | Post-IPO Holding (%) | Mandatory Lock-in Terms & Dilution |
|---|---|---|---|
| Founders / Promoters (Aadit Palicha & Kaivalya Vohra) | 18.45% | 14.20% | 20% minimum promoter locked 18 Mos |
| Nexus Venture Partners & Institutional PE Funds | 42.80% | 31.50% | OFS Secondary exit of 113.5M shares |
| Global Growth Investors (StepStone, Goodwater, Glade Brook, Avra) | 38.75% | 31.80% | Pre-IPO investor 6-month lock-in |
| Public & Anchor Allottees | 0.00% | 22.50% | Primary fresh issue float |
| Litigation Category / Proceedings | Adjudicating Forum | Quantifiable Exposure | Materiality Assessment |
|---|---|---|---|
| E-Commerce Marketplace & Direct Tax Inquiries | Income Tax Appellate Tribunal | ₹48.50 Cr | ESOP valuation & business loss assessments |
| Consumer Court Complaints & Delivery SLAs | District Consumer Forums | ₹1.20 Cr | Routine retail service dispute resolution |
| Auditor IFCoFR Opinion | BSR & Co. LLP (KPMG Member Firm) | ₹0.00 Cr | Unmodified clean audit report |
1. Executive Business Summary & Core Operations
My read of Zepto's UDRHP-I is that while it represents a phenomenal growth story in India's quick commerce landscape (CAGR of 125.4% over FY24-FY26), it is not yet a buy. The company continues to burn substantial cash, and its current operating losses are massive. My stance is neutral; I would track it to see if it can replicate Blinkit's transition to EBITDA profitability.
2. Value Proposition, Products & Operations
Zepto is a leading quick commerce platform in India that offers 10-minute delivery of groceries, fresh foods, and daily essentials. It operates through a dense network of local dark stores (1,139 stores as of March 31, 2026) and offers B2B trading, last-mile logistics, and platform advertising services to merchant partners and brands.
3. Industry Dynamics & Market Positioning
Zepto is raising Rs 8,010.00 cr through a fresh issue of shares, alongside an OFS of up to 113,466,566 shares by selling shareholders. Only PE and institutional investors (like Nexus Ventures and Kaiser Foundation) are selling; the promoters are not selling. The fresh proceeds are growth-oriented, earmarked for setting up 1,904 new dark stores (Rs 1,628.98 cr), technology (Rs 1,324.78 cr), marketing (Rs 520.00 cr), and lease rentals of existing stores (Rs 1,734.94 cr).
4. Detailed Financial Trajectory & Margin Analysis
Zepto's numbers show hyper-growth, but it is not backed by cash generation. Operating cash flow (CFO) has been negative in all three years (FY26: -Rs 3,462.44 cr, FY25: -Rs 4,624.83 cr, FY24: -Rs 1,097.88 cr). The cash conversion cycle is negative (-16.46 days in FY26) because the company stretches its suppliers (73.55 payable days) to fund collections (39.10 debtor days) and inventory (17.99 inventory days). EBITDA margins improved from -41.3% in FY25 to -23.2% in FY26 but remain deeply negative.
5. Promoter Integrity, Governance & Shareholding
Promoters hold 18.47% pre-IPO on a fully diluted basis, and none of their shares are pledged. However, KMP remuneration is high in absolute terms (Ramesh Bafna was paid Rs 3.85 cr in FY26). S.R. Batliboi & Associates LLP qualified their report on internal controls (IFCoFR) due to access and change control issues in IT systems. Related-party transactions include significant intercompany loans to operational subsidiaries, though non-eliminated RPTs are negligible.
6. Relative Valuation & Benchmark Multiples
| Company Name | CMP / Issue Price (₹) | P/E Ratio (x) | EV / EBITDA (x) | RoNW / ROCE (%) | Annual Revenue (₹ Cr) |
|---|---|---|---|---|---|
| Zepto (Kiranakart Technologies) | TBA | N/A (Loss) | N/A | -23.2% | ₹22,623.58 Cr |
| Eternal Limited (Zomato / Blinkit) | ₹260 | 115.0x | 68.5x | 14.8% | ₹16,500.00 Cr |
| Swiggy Limited (Instamart) | ₹420 | Loss | Loss | -12.4% | ₹14,000.00 Cr |
| Quick Commerce Industry Benchmark | - | 85.0x | 42.0x | Growth | - |
Zepto's IPO price and multiples are not yet determined. However, peer comparison shows Zomato (Eternal) trading at a P/E of 635.05x (consolidated), with Swiggy trading at a loss (P/E NA). Zepto's pre-IPO WACA of Series H CCPS in late 2025 was Rs 37.74 per share (adjusted). Public investors should compare the final IPO price band against this WACA to assess the markup being charged.