Zepto Targets 75% Cash Burn Reduction Ahead of Planned $750 Million IPO

Zepto, a leading quick commerce company, is implementing aggressive cost-cutting measures to slash its monthly cash burn by approximately 75%, targeting a range of $10-20 million (roughly ₹88.5 crore to ₹177 crore). This strategic move is in preparation for a planned Initial Public Offering (IPO) valued at $750 million, which will also include a $50 million offer for sale. The company is reducing marketing expenditure and staff costs to significantly decrease its operating losses. Zepto's monthly cash burn stood at $80 million (₹708 crore) in August, a figure it aims to drastically lower. Competitors like Swiggy Instamart and Blinkit are also operating in this space, with Blinkit showing a decline in its adjusted Ebitda loss. Zepto plans to file its draft IPO documents confidentially within the next 20 days, aiming for a public listing that could be one of the fastest in India's consumer internet sector. The company, founded in 2021, has raised substantial funding, including a recent $450 million round at a $7 billion valuation, and is focused on reaching Ebitda profitability before its public offering. Zepto reportedly processes around 2 million orders daily and reported ₹11,110 crore in revenue from operations in FY25, though it incurred a net loss of ₹1,249 crore in FY24. Expansion plans are focused on deepening serviceability in existing metro markets rather than entering smaller towns.

Impact: This news is highly relevant for the Indian stock market as it signals a significant upcoming IPO in the rapidly growing quick commerce sector. Investors will closely watch Zepto's ability to achieve profitability and reduce its burn rate, which could influence sentiment towards similar tech IPOs and impact valuations of listed competitors. The success of Zepto's IPO could pave the way for other Indian startups. Rating: 8/10.

Difficult Terms: * **Cash burn**: The rate at which a company spends its cash reserves, particularly when it is operating at a loss. * **IPO (Initial Public Offering)**: The process by which a private company sells its shares to the public for the first time, becoming a publicly traded entity. * **Ebitda (Earnings Before Interest, Taxes, Depreciation, and Amortization)**: A financial metric that measures a company's operating performance by excluding interest, taxes, depreciation, and amortization expenses, indicating core profitability. * **Dark stores**: Small, strategically located warehouses used by quick commerce companies to store inventory and fulfill online orders for rapid delivery, not open to the public. * **Offer for sale**: A part of an IPO where existing shareholders sell their shares to the public instead of the company issuing new ones. * **Valuation**: The estimated worth or market value of a company, often determined during funding rounds or IPOs.