Summary of this article
Indian mutual funds have reportedly disagreed with Zepto's $5 billion IPO valuation.
Investors demand price cuts citing missing food delivery vertical.
Zepto IPO's timeline depends on gaining approval from mutual fund houses.
Zepto’s much awaited public issue is witnessing fresh challenges even as the primary market is witnessing a resurgence in investor interest. According to a report by the Economic Times which cited sources privy to the matter, several major domestic mutual funds have disagreed with the valuation sought by Zepto for its initial public offering (IPO).
Zepto's Valuation Woes
The asset managers, who are among the biggest investors in recent IPOs, have told Zepto's representatives that they would not be comfortable subscribing to the issue even at the lower valuation being considered by the company.
Earlier in October, Zepto quoted a peak valuation of $7 billion following a $450 million funding round which saw participation from the California Public Employees' Retirement System and General Catalyst. However, as the company moved closer to its public issue, it reduced the valuation to a range between $4 billion and $5 billion. Despite the relatively lower valuation, domestic institutional investors feel that even the reduced figure is too aggressive for the current market environment.
What Mutual Fund Houses Said About Zepto IPO
According to the report, top mutual funds and large domestic insurers are seeking valuations as much as 30 per cent to 40 per cent below the reduced IPO valuation. This pushback has led Zepto's prominent investors to persuade money managers to meet the company midway. The company has also stepped up efforts to line up support from deep-pocketed High Networth Investors (HNIs) and large family offices.
According to the report the two key issues related to the company’s IPO-valuation is that it lacks a dedicated food delivery business, unlike its direct peers in the market. Notably, the company’s direct peers include Swiggy and Eternal both of which have a business model which combines food delivery services and quick commerce delivery. Without the diversified revenue stream of a food delivery vertical, investors believe Zepto cannot command the same premium as its competitors.
Additionally, fund managers are also wary of agreeing to higher valuations following the post-listing share price performance of prominent new-age D2C businesses. In some past issuances, mutual funds have been slammed for subscribing to these IPOs at peak valuations, making DIIs highly cautious.
Zepto IPO Timeline
Quick commerce firm Zepto has been planning its public market entry for several months. The firm’s D-street debut plans began when Zepto converted into a public limited company in late December 2025. The firm filed its preliminary IPO papers through the confidential pre-filing route with the Sebi.
Zepto filed its updated draft red herring prospectus (UDRHP) in June 2026 with the Securities Exchange Board of India. According to the UDRHP the company is likely to raise more than Rs 8,000 crore through a fresh issue of shares and an offer for sale.
According to multiple reports the company is seeking to list its shares on the exchanges by August 2026. However, with the ongoing disagreement over valuation, the final timeline and exact pricing of the Zepto IPO remain dependent on whether bankers can successfully bridge the gap between the startup's expectations and mutual fund houses' caution.
