Zepto IPO: 10 key risks investors should know from UDRHP ahead of issue opening

Quick-commerce platform Zepto has taken another step toward its stock market debut by filing an updated draft red herring prospectus (DRHP) with the Securities and Exchange Board of India for its proposed initial public offering (IPO).

According to the updated filing, the IPO will comprise a fresh issue of shares worth ₹8,010 crore and an offer-for-sale (OFS) of 113 million shares by existing investors. Zepto initially filed its IPO documents through SEBI's confidential pre-filing route in December 2025 and reportedly received regulatory approval in May 2026.

The OFS will see several early investors partially exit their holdings, including Nexus Venture Partners, Contrary Capital, Kaiser Permanente, and Razor Capital.

The company plans to use proceeds from the fresh issue to expand its network of dark stores across existing and new markets, fund lease-related expenses, strengthen technology and cloud infrastructure, and support marketing initiatives. As of 31 March, Zepto operated 1,139 dark stores across the country.

Founded in December 2020 as Kiranakart Technologies, the company was renamed Zepto Pvt Ltd in April 2025 and converted into a public limited company in December 2025.

Co-founders Aadit Palicha and Kaivalya Vohra, along with their families and family offices, collectively hold a 19.6% stake in the company.

For the quarter ended March 2026, Zepto reported a 75% year-on-year increase in operating revenue to ₹7,498 crore, while its net loss narrowed to ₹1,539 crore from ₹1,832 crore in the corresponding period last year, reflecting continued growth alongside improving operating metrics.

Here are some of the key risks listed by the company in its Updated Draft Red-Herring Prospectus (UDRHP):

Zepto IPO: Key Risks

1. The company has incurred losses and experienced negative cash flows from operating activities since its establishment. Specifically, we reported a restated loss of ₹59,051.92 million, ₹46,997.14 million, and ₹12,147.94 million in 2026, 2025, and 2024, respectively. If the company fails to achieve adequate revenue growth, it may continue to incur losses. Moreover, they might struggle to maintain their historical growth rates, and their past performance may not be a reliable indicator of future growth or financial outcomes.
2. Maintaining and attracting users is essential to their business, and failing to do so effectively could negatively impact their financial status, cash flows, and operational outcomes.
3. Dark stores play a crucial role in their operations. They plan to allocate a portion of the Net Proceeds for: (a) costs associated with expanding their network of dark stores by establishing new locations in both current and new markets; and (b) expenses related to lease payments for their existing dark stores. If they are unable to effectively manage and grow their dark store network cost-efficiently, it could negatively affect their business, financial standing, cash flows, and overall performance.
4. They face strong rivalry in the markets they operate in, and if they are unable to compete successfully, their business, financial health, cash flows, and operational results could suffer.
5. The continuous operation of their information technology systems is crucial for their business. If their information technology systems do not perform effectively, it could negatively affect their operations and reputation, leading to detrimental consequences for their business and activities.
6. They depend on external contract manufacturers and suppliers for their private labels and Zepto Café operations. Any inadequacy in the performance of these service providers or failure to comply with legal requirements could negatively affect their operations, financial status, cash flow, and overall business results.
7. The positioning and dimensions of warehouses play a vital role in the supply chain services provided to wholesalers and retailers. Inefficient warehouse management can negatively impact a business's financial status, cash flow, and operational outcomes.
8. Neglecting to promptly acquire, maintain, or renew necessary licenses, registrations, permits, and approvals might negatively impact their business, cash flow, and operational results.
9. If Merchant Partners offer fraudulent, imitation, illegal, or unsafe products on their platforms, or if they impersonate other brands, their reputations, businesses, financial statuses, cash flows, and operational results could suffer.
10. The industry in which they function has minimal entry barriers and low switching costs for consumers, which could significantly harm their operations.

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