Zepto was worth $7 billion in October. Mutual funds now say $2.5 to $3 billion. Revenue doubled in between

31 August 2026

In October 2025, investors backed Zepto at a $7 billion valuation. Nine months later, India's largest mutual funds looked at the same company and priced it at $2.5 to $3 billion. In that window, nothing broke. Revenue more than doubled. So what changed?

It's not really one business

Most people think of Zepto as quick grocery delivery. On the numbers, it's four businesses bundled into one app: selling groceries, charging for warehousing and delivery, selling ad space to brands, and collecting subscription and franchise fees. Grocery sales, the part everyone associates with the brand, grew 92% in FY26 to ₹17,588 crore. That's the slowest growing piece of the business. Warehousing and delivery revenue grew 131%. Advertising grew 151%. Platform services jumped over 500%, though off a small base. Total revenue crossed ₹22,624 crore, up 104% from ₹11,110 crore the year before.

Where the losses actually come from

Break down every ₹100 of revenue and the story becomes clear. Zepto spends about ₹80 buying the groceries it sells, leaving roughly ₹20 of gross margin. Getting that item to your door then costs around ₹13.50 in delivery and ₹9.50 in storage, so the basic act of fulfilling the order already costs more than the margin earned on the product itself. Everything else, wages, marketing, depreciation, and interest, stacks on top of that. The encouraging part is that this gap is closing fast. Gross margin rose from 14.1% to 19.6% year on year, while delivery and storage costs fell from 26.8% of revenue to 23%. The shortfall between the two shrank from 12.7% of revenue to just 3.4%. EBITDA margin improved from negative 41.3% to negative 23.2%, and the total loss grew only modestly, from ₹4,700 crore to ₹5,905 crore, despite revenue doubling. Marketing spend rose only 17% in that same period, and the company carries zero borrowings.

The part that's actually working

For the first time in FY26, Zepto earned more from advertising than it spent running the app. Ad revenue came in at ₹1,636 crore against ad spend of ₹1,389 crore, a net positive of ₹247 crore, compared with a net loss of ₹536 crore the year before. Advertising behaves nothing like grocery. Selling a packet of biscuits earns Zepto about ₹20 and then costs ₹23 to deliver. Letting a brand pay to appear at the top of search results earns close to ₹90 of every ₹100, with no truck, no rider, and no cold chain involved. Ads made up only 7.2% of revenue in FY26, but strip them out and the year's loss jumps from around ₹5,900 crore to nearly ₹7,400 crore. It's the same playbook Amazon ran, where advertising started small and became one of the most profitable parts of the business. Zepto looks early on a similar curve.

Why the IPO got paused, not cancelled

The timeline is worth laying out plainly. Zepto raised at $7 billion in October 2025 and filed a confidential draft prospectus in December. By May 2026, regulatory feedback and market chatter had the company talking ₹11,000 to 12,000 crore. The updated filing in June proposed an ₹8,010 crore fresh issue plus a stake sale by existing investors. By July, institutional investors were indicating a value closer to $2.5 to 3 billion, and on July 31 the CEO told staff the listing would pause for one or two quarters. The filing is still live with the regulator, and the company has until roughly November 2027 to use it. The business itself kept growing through this. Orders crossed roughly 640 million for the year, more than 2.3 million a day by the March quarter, across about 1,139 dark stores. What changed was who was setting the price. A private round involves people who all benefit from a higher number. An IPO brings in buyers who owe the company nothing and are simply asking when the losses stop and whether there's enough cash to get there. On that question, the balance sheet gives a real number to work with. Zepto held about ₹4,770 crore in liquid cash and investments as of March 2026, against roughly ₹3,462 crore burned on operations that year. That works out to something like 16 months of runway. Not a crisis, but not a position that lets you insist on your own price either. Zepto isn't the only one recalibrating. PhonePe deferred its listing plans earlier this year, Flipkart and Curefoods have pushed their timelines back, and Honasa filed at close to $3 billion but listed at roughly $1.2 billion. Public markets in India have stopped treating a private valuation as settled fact.

Bottom line

Zepto's underlying numbers are genuinely improving, arguably faster than most companies its size in the country. But the market isn't pricing the growth story right now. It's pricing the gap between what the business earns on each order and what it costs to fulfil, and asking how much more capital it takes to close that gap for good. The company thinks the answer is a quarter or two. Public investors seem willing to wait and see before paying up.

Figures from Zepto Limited's FY2025-26 consolidated annual report, converted to ₹ crore, with store and order counts from the updated draft prospectus. For information only, not investment advice.