Impact of Zepto IPO on India's Instant Retail Competitive Landscape and Investment Evaluation

• Valuation and Financing
  : In the latest financing round in October 2025, it raised $450 million with a valuation of $7 billion; plans to raise approximately ₹116.8 billion (about $1.4 billion) through IPO [1][2].
• Revenue Scale
  : For the fiscal year ending March 2025, the company’s revenue reached ₹96.7 billion, a year-on-year increase of 129%, maintaining rapid growth [2].
• Listing Path
  : Adopts a confidential submission framework, providing flexibility for adjusting listing pricing and issuance scale [2].

• Market Share
  : Blinkit, Zepto, and Swiggy Instamart together account for approximately 88% of the market share [5], with extremely high industry concentration.
• Competition Intensification
  : IPO brings capital supplementation, which is expected to drive more dark store expansions and category extensions. The three major players continue to “burn money” for growth, leading to fierce competition [3].
• Differentiation Paths
  :
  • Blinkit: Leveraging Zomato’s ecosystem synergy, its Gross Order Value (GOV) has exceeded the main platform’s food delivery business and it was the first to achieve rapid profitability [1][5].
  • Swiggy Instamart: As part of a diversified business line, it needs resource balance and has a slower profit rhythm [5][6].
  • Zepto: Driven by aggressive expansion and independent financing, it will have more abundant capital after listing, supporting faster network layout and category expansion [2].

• Profit Path Clarity
  : Leading players have shown signs of profitability (e.g., Blinkit is expected to achieve profitability by March 2026) [5]. The IPO will further strengthen market confidence in the “scale first, then profit” path.
• Capital Expenditure Pressure
  : Although IPO provides funds, it also means that stricter balance between expansion and profitability is needed in the future to maintain valuation and market recognition.

• Market High-Speed Expansion
  : India’s instant delivery market size is expected to grow from approximately $6 billion in 2024 to $100 billion by 2030, with a strong compound annual growth rate [5][7].
• Penetration Rate Rapidly Rising
  : Instant delivery has penetrated 45% of festive shopping and accounts for nearly two-thirds of online grocery orders [11], with consumption habits quickly shifting to “10-minute delivery”.
• Impact on Traditional Retail
  : Approximately 82% of consumers have shifted at least 25% of their purchases from traditional community stores to instant delivery apps [8], continuously squeezing traditional retail.

• Price-to-Sales Ratio Perspective
  : Zepto’s latest valuation is approximately $7 billion, with revenue of ₹96.7 billion (about $1.15 billion) in FY2025 (ending March), corresponding to a PS ratio of about 6x [2]. This level matches the industry’s high-growth phase.
• Benchmarking against Listed Companies
  :
  • Swiggy’s post-IPO valuation is approximately $12 billion [6];
  • Blinkit under Eternal (Zomato) has strong revenue and growth, boosting the parent company’s stock price to a record high [6].
    This provides a comparable anchor for Zepto, but specific pricing needs to consider growth quality, profit realization rhythm, liquidity discount, etc.

• Increased Demand Rigidity
  : The penetration rate of 10-minute delivery in grocery and emergency scenarios continues to rise, and user habits are shifting from “optional” to “mandatory”.
• Category and Scenario Expansion
  : Expanding from high-frequency groceries to high-AOV categories (such as 3C, beauty, fashion) opens up new ARPU and gross profit spaces [1][4].
• Technology and Efficiency Driven
  : Data-driven product selection, path optimization, and warehouse layout will gradually improve the fulfillment cost structure.

• Leading Player Effect
  : 88% of the market share is occupied by three players, with significant network effects and scale advantages, and the trend of head concentration continues [5].
• Capital and Resource Leverage
  : IPO strengthens capital ammunition, helping to quickly sink and expand categories, and consolidate the moat.

• High Fixed Costs
  : Dark store networks and delivery rider systems bring rigid fixed costs, and profit pressure is significant during slow growth phases.
• Normalization of Price Competition
  : Subsidies and rebates are still indispensable for user acquisition and retention, which may erode gross profits in the short term.
• Divergence in Profit Expectations
  : There are differences in the market regarding the profit timeline, and some companies may need a longer cycle to achieve break-even [5].

• Amazon and Flipkart
  : Accelerated entry into the instant delivery market in 2024-2025, relying on e-commerce and supply chain advantages, which may reshape the competitive pattern [12][14].
• Upgrade of Competition Dimensions
  : From “fast” to “more” and “economical”, competing on supply chain depth and product selection breadth requires higher cost structures and capital strength.

• Rider Welfare and Regulation
  : The compliance of the gig economy is becoming stricter, and rising labor costs may erode the profits of the fulfillment model [1].
• Data and Privacy
  : High-frequency location and transaction data face stricter compliance requirements.

• High Valuation Dependent on Growth
  : Valuation levels are sensitive to growth rates; if growth slows or market sentiment weakens, there is a risk of correction.
• Liquidity Discount
  : New stocks may be more volatile in the early stages, so short-term discounts due to insufficient liquidity need to be considered.

• Short-Term Perspective
  : Focus on IPO pricing and first-day trading performance, as well as valuation premiums/discounts compared to comparable companies.
• Long-Term Perspective
  : Pay attention to:
  1. Profit realization ability (e.g., EBITDA positive timeline and single-store model optimization);
  2. Category expansion and repurchase improvement;
  3. Differentiated strategies to respond to Amazon/Flipkart entry.
• Risk Hedging
  : It is recommended to diversify allocations, cover the three leading companies, avoid single bets, and dynamically adjust positions based on quarterly financial reports and industry data.

[1] 金灵API数据
[2] TechCrunch - “Zepto raises $450 million at $7 billion valuation as Indian quick commerce market heats up” (https://techcrunch.com/2025/10/16/zepto-raises-450-million-at-7-billion-valuation-as-indian-quick-commerce-market-heats-up/)
[3] CNBC - “India’s Zepto files for IPO as quick-commerce race heats up” (https://www.cnbc.com/2025/12/27/indias-zepto-files-for-ipo-as-quick-commerce-race-heats-up.html)
[4] Yahoo Finance/Retail Insight Network - “Zepto prepares confidential IPO filing to raise about Rs116.8bn – report” (https://finance.yahoo.com/news/zepto-prepares-confidential-ipo-filing-122816881.html)
[5] Bloomberg - “India’s E-Commerce Stocks Outrun Chinese Peers on Profit …” (https://www.bloomberg.com/news/articles/2025-07-03/india-s-e-commerce-stocks-outrun-chinese-peers-on-profit-hopes)
[6] Bloomberg - “World’s Fastest Deliveries Ignite an Investment Frenzy in …” (https://www.bloomberg.com/features/2025-India-instant-shopping/)
[7] Bloomberg - “Ashmore’s $2.3 Billion Money Manager Counts on Indian …” (https://www.bloomberg.com/news/articles/2025-12-03/nykaa-swiggy-among-bets-as-ashmore-money-manager-counts-on-indian-working-women)
[8] Bloomberg - “DMart Hit as Indian Grocers Face Risks From Rapid …” (https://www.bloomberg.com/news/articles/2025-01-13/dmart-slips-on-profit-miss-as-discounts-rapid-deliveries-hurt)
[9] Yahoo Finance - “India’s quick-commerce growth may struggle: Blume report” (https://sg.finance.yahoo.com/news/indias-quick-commerce-sector-may-104502703.html)
[10] Yahoo Finance - “Eternal Limited (ETERNAL.BO) Q1 24/25 earnings call …” (https://finance.yahoo.com/quote/ETERNAL.BO/earnings/ETERNAL.BO-Q1-2025-earnings_call-194185.html/)
[11] MediaNews4U - “Quick Commerce powers 45% of festive purchases this year: WPP-Meta Consumer Report” (https://www.medianews4u.com/quick-commerce-powers-45-of-festive-purchases-this-year-wpp-meta-consumer-report/)
[12] Asian Business Review - “India’s e-commerce market to hit $211.6b in 2025” (https://asianbusinessreview.com/in-focus/indias-e-commerce-market-hit-2116b-in-2025)
[13] TechCrunch - “SoftBank stays in as Meesho $606M IPO becomes India’s first major e-commerce listing” (https://techcrunch.com/2025/11/28/softbank-stays-in-as-meesho-606m-ipo-becomes-india-s-first-major-e-commerce-listing/)
[14] Yahoo Finance - “KNOT Raises $5M Round Led by 12 Flags, within 3 …” (https://finance.yahoo.com/news/knot-raises-5m-round-led-073500681.html)