Overview
Zepto, one of the players with a big role in quick commerce, is leading the restructuring storm before it aims at the public listing. Now based in 35 cities and soon to have 650 dark stores, the company is preparing for an IPO by March or April 2025. In this article we explore Zepto’s strategic changes, operational changes and preparations for the IPO and ask what the big changes mean for the company and stakeholders.
A Move to a Marketplace Model
In what may be an entirely new direction, Zepto has registered a new entity namely Zepto Marketplace Private Limited, which indicates that it has a transition in store from a B2B2C model to a marketplace model. What we call a structural shift is in fact a strategic turn, intended to improve operational efficiency, quality control and customer delight.
With B2B2C model, Zepto performed both procurement and customer interactions but with the marketplace model, the retail operations are retained by licensees, and Zepto maintains control over procurement and branding. It puts Zepto in line with industry titans like Blinkit and Swiggy Instamart, and in a good path for long term growth.
IPO Preparations Underway
Planning and compliance is important in Zepto’s journey towards an IPO. Key developments include:
1.Reverse Merger Application
- The National Company Law Tribunal (NCLT) will hear Zepto’s reverse merger application January 17, 2025. It is a key before the IPO in simplifying its corporate structure.
2.Domicile Shift
- To reach a local regulatory norm and instil faith amongst Indian investors, Zepto secures approval to shift its base from Singapore to India. The move also helps in attracting the domestic investors as the company would also be a majority Indian-owned entity.
3.Board Meeting Highlights
- The IPO related decisions, such as appointment of the investment bankers and independent directors, will be finalized at the January 19, 2025 board meeting. Already pitching in on the process are investment banks such as Goldman Sachs, Morgan Stanley and Axis Capital.
4.Timeline for IPO Filing
- By March or April 2025, Zepto plans to file its Draft Red Herring Prospectus (DRHP) and make public listing in the second half of the year.
Strong Revenue Growth & Expansion
IPO ambitions are founded on Zepto’s financial performance. Its operating revenue grew 120 times from ₹2,026 crore in FY23 to ₹4,455 crore in FY24. This growth is fueled by:
- City Expansion: Currently, Zepto is present in 35 cities and will cross 50 cities by the next quarter.
- Business Diversification: The company is shifting its focus to niche segments and is spinning off its Zepto Cafe business as a standalone app.
Regulatory Compliance and Competitive Edge.
India’s regulatory requirements for FDI norms had urged Zepto to restructure. Being majority Indian owned will help Zepto solidify its position in the crowded quick commerce market where it is ranked number two.
Also, this operational overhaul is more about transparency, a critical factor in building trust with investors and with policymakers. As a marketplace model, Zepto can manage inventory easily and provide a better customer relationship than a Marketplace.
Key Insights
What This Means for Investors
Conclusion
Zepto’s bold steps towards its planned IPO demonstrate just how committed it is to growth, transparency, regulation compliance. Entering into a transition from its pioneer model to marketplace, coupled with a strong revenue growth trajectory and preparations for a strategic IPO, the company constructs itself towards long term success. As Zepto prepares to make its big leap into the public market, everyone is waving goodbye to the past as they watch to see how the challenges present themselves and how these opportunities are finally seized.
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