Zepto to become profitable in FY26, eyes IPO in 2025: CEO Aadit Palicha

Zepto, the leading quick commerce company co-founded by Aadit Palicha and Kaivalya Vohra, is on track to achieve profitability by the fiscal year 2025-26. CEO Aadit Palicha has expressed optimism about the company's initial public offering (IPO) plans, which are expected to materialize in 2025.

Founded by Stanford University dropouts Palicha and Vohra, Zepto recently raised $350 million from prominent domestic investors, marking a significant step towards becoming a fully Indian-owned entity. This funding round, led by Motilal Oswal's Private Wealth division, aimed to increase domestic ownership in preparation for the IPO.

In an interview with PTI, Palicha addressed criticisms that the quick commerce model is harming traditional kirana stores, dismissing these claims as unfounded and emphasizing the positive impact on job creation. He highlighted that quick commerce has generated hundreds of thousands of jobs and added value for both consumers and workers.

IPO Plans and Domestic Investment

Palicha stated that the recent fundraising round included investments from high-net-worth individuals, family offices, and leading financial institutions, all from India. The goal was to boost domestic ownership ahead of the planned IPO in 2025. "Our ambition is to go public in 2025, and if our business continues to perform well, we are optimistic about achieving this," he said.

He also pointed out that the quick commerce model, particularly the 10-minute delivery for groceries and daily essentials, showcases the unique strengths of Indian technology. Palicha refuted allegations of predatory pricing, noting that 99.8% of products sold on Zepto's platform are above cost.

Economic Impact and Expansion

Palicha argued that quick commerce is not shrinking the kirana store market. "It is economically impossible for the kirana store market to be shrinking. We are growing, and so are kirana stores and other commerce formats," he said. He cited estimates predicting over $200 billion in incremental consumption in India, demonstrating the sector's potential.

The quick commerce industry has created approximately 450,000 jobs in three years, with average wages over ₹20,000, significantly higher than those in the informal sector. "This is Indian technology and infrastructure. We should celebrate this achievement," Palicha said.

Zepto is rapidly expanding, aiming to operate in over 50 cities by the next quarter, up from about two dozen currently. "In April-May 2024, we hit a billion dollars in top-line revenue. We are multiplying on that base and expect to continue growing," he added.

Profitability and Competitive Landscape

Palicha noted that more stores are becoming profitable in shorter timeframes, with profitability timelines reduced from 23 months to just eight months. "In the next financial year, we will be PAT positive, which should send a positive signal to the markets," he said, referring to profit after tax.

Zepto is also seeing significant success with Zepto Cafe, a margin-additive initiative that enhances customer retention and frequency. "We will reach a ₹1,000 crore business in Zepto Cafe alone, as it boosts customer engagement with our core business," Palicha explained.

Regarding competition from Blinkit and Swiggy Instamart, Palicha welcomed it, stating, "The market is genuinely large enough for everyone. We focus on our execution and feel good about the competition."

In summary, Zepto is poised for profitability in FY26 and has ambitious IPO plans for 2025, backed by strong domestic investment and rapid business growth.