Zepto to become profitable in FY26, hopeful for IPO plans next year: CEO Aadit Palicha
- Zepto CEO Aadit Palicha is hopeful that the leading quick commerce company will turn profitable by the next fiscal and Zepto's IPO plans will likely materialise in 2025
Quick commerce major Zepto says it is on a clear path to becoming a fully Indian-owned entity and hitting the profitability milestone in the next fiscal year (2025-26). This comes after its latest $350 million-worth funding round from marquee domestic investors. Zepto co-founder and chief executive officer (CEO) Aadit Palicha is also optimistic about a possible initial public offering (IPO) in 2025.
In an interview with news agency PTI, Palicha strongly countered allegations that the quick commerce model is disrupting and stunting the growth of traditional kirana stores. He asserted that these and other "narratives" are not grounded in real data and underrate the industry's "net positives", including job creation.
Also Read: Zepto charges higher for customers with phones worth over ₹30,000, claims viral Reddit post
Zepto CEO optimistic of IPO plans in 2025
The latest fundraising round included investments from Indian HNIs, family offices, and leading financial institutions. It was led exclusively by Motilal Oswal's Private Wealth division. Palicha said the purpose of the round was purely to increase domestic ownership on the way to an IPO sometime in the calendar year 2025.
"That's our ambition...of course, capital markets may change, but for now, we're optimistic that if the business continues to perform as well, we will go public in calendar 2025," the Zepto CEO told PTI. Palicha further said that instant 10-minute delivery models like Zepto had generated lakhs of jobs, been wage-additive, and created all-around "value" for consumers and workers.
The quick commerce model executed at a scale for groceries and items of daily use is unseen and unmatched globally, he said, adding that this goes to showcase the unique strengths of Indian technology. Armed with data and numbers, Palicha refuted allegations that a group of retail distributors had levelled, including predatory pricing, saying that 99.8 per cent of products sold on the platform were above cost.
"So the predatory pricing allegation similar to the other 'data-free narratives' created about quick commerce over the past few years doesn't actually stack up, and we are happy to have anyone who doesn't believe it to come to our office and take a look at our books because it is a mathematical fact," he said.
Citing some estimates, Palicha said that India is poised to see over $200 billion in incremental consumption. "It is economically impossible that the Kirana store is shrinking. We are growing, but so are the Kirana stores, and so are other formats of commerce," he said.
According to him, allegations around predatory pricing "do not stack up" either. "The reason why such narratives are particularly dangerous is because it actually hides from all the net positive we've done for the country," he said.
A case in point is that the quick commerce industry in three years has created 4.5 lakh jobs, he said, adding that average wages of over ₹20,000 are also at a level "meaningfully higher" than jobs in the informal sector.
"...most importantly, this is Indian technology, it's a real infrastructure. I think it's fantastic, and we should celebrate new Indian technology. Nowhere else in the world at scale can you tap a button on your phone and get your day-to-day essentials like shampoos and rice delivered in 10 minutes," he said. Regarding Zepto's plans to shift its domicile to India from Singapore, Palicha said the company is moving swiftly, and all boxes are either checked or close to being checked.
With business growing rapidly, Zepto is looking to expand to over 50 cities by next quarter, taking its footprint over and beyond about two dozen cities right now. “In April-May 2024, we hit a billion dollars in the top line. We're already multiplied on that base and expect to continue to multiply,” he said.
Very soon we (will) make another large milestone on hitting another big top-line threshold...we are growing rapidly and multiplying on a scale of billions of dollars in the top line, one of the fastest-growing consumer companies in the country right now," he added.
As per Palicha, more and more stores are turning profitable, and within shorter time spans of 23 months, profitability timelines have come down to eight months. "In the next financial year, we will be PAT positive. We are quite confident, and hopefully, that will be a positive signal to the markets," he said. PAT is short for profit after tax.
Palicha said the company is seeing "phenomenal results" on Zepto Cafe, which is margin additive and increasing customer stickiness and retention for the core business. "We will get to ₹1,000 crore business in Zepto Cafe alone...customers love it. It's giving us more frequency and retention in the core business...People are opening the app multiple times," he said.
On competition from rivals like Blinkit and Swiggy Instamart, he said competition is a "good thing" and pointed out that the market is "genuinely quite large". "There is plenty of room for everybody, so we feel good about it, in a nutshell, and we just focus on our own execution... We don't think too much about competition, and we think the market is large enough," he said.
Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
Business NewsCompaniesNewsZepto to become profitable in FY26, hopeful for IPO plans next year: CEO Aadit Palicha
First Published:10 Dec 2024, 06:57 PM IST
- Top Gainers
- Top Losers
- 52 Week High