More than a year after founder Aadit Palicha said Zepto was only a few hundred basis points away from EBITDA and operating cash flow (OCF) breakeven, the company's draft red herring prospectus (DRHP) suggests that goal remained elusive.
Even in its strongest quarter of FY26, Zepto was still more than 1,500 basis points away from breakeven, highlighting a significant gap between earlier expectations and subsequent financial performance.
In April 2025, Palicha had said that Zepto was "within touching distance of EBITDA and OCF breakeven within a few months", backed by what he described as a strong cash position. A month later, he reiterated that the company expected to be "within a few hundred basis points of breakeven" on both metrics during the same period.
1 June 2026
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The IPO filings, however, offer the first comprehensive view of how that trajectory evolved.
While Zepto improved several profitability metrics during FY26, the company remained meaningfully in the red. Adjusted EBITDA improved from -19.5% of net revenue value (NRV) in Q1 FY26 to -15.3% in Q4 FY26, its best-performing quarter of the fiscal. The Q4 improvement still left Zepto roughly 1,500 basis points away from breakeven, materially wider than management's earlier expectation of a few hundred basis points.
The gap becomes starker when viewed against peers. Blinkit turned adjusted EBITDA positive in Q3 FY26 and remained profitable in Q4 FY26, while Zepto continued to report the highest adjusted EBITDA losses among the three major quick-commerce players.
Brokerage firm Jefferies observed that although Zepto's margins improved during FY26, they remained the weakest among Blinkit, Instamart and Zepto, underscoring how far the company remains from matching the profitability trajectory of the category leader.
Zepto's DRHP shows that the company remained far from operating cash flow breakeven, reporting a negative operating cash flow (represented as net cash (used in) operating activities in the DRHP) of ₹3,462 crore during the fiscal year, despite improving from a cash outflow of ₹4,625 crore in FY25.
The Cost of Getting Bigger
The disconnect becomes even more apparent at the full-year level. Zepto reported an adjusted EBITDA loss of ₹5,041.5 crore in FY26, up 11.5% from the previous year. Although loss per order improved to ₹78.75 from ₹136.15 in FY25, the company's aggressive expansion strategy continued to exert significant pressure on its cost structure.
Total expenses surged 79% YoY to ₹29,026.7 crore in FY26, driven largely by fulfilment and infrastructure-related investments. Delivery and handling expenses more than doubled to ₹3,046.3 crore, while warehousing costs jumped 56% to ₹2,150 crore as Zepto expanded its dark-store network and fulfilment footprint across the country.
The spending pattern reflects a broader growth-versus-profitability trade-off playing out across quick commerce. Jefferies noted that Zepto nearly doubled its dark-store count over the last two years to 1,139 stores by the end of FY26.
While management has consistently argued that greater scale improves unit economics over time, the rapid expansion has also added substantial fixed costs in the form of leases, warehousing and manpower, delaying the company's path to profitability even as revenue and order volumes continue to grow.
The cost pressures extended beyond fulfilment and infrastructure, with employee benefit expenses rising 44% YoY to ₹1,784.7 crore and other expenses increasing 46% to ₹4,838.3 crore, which includes the above-mentioned warehousing cost and advertising costs of ₹1,389.1 crore.
The disclosures underscore the trade-off at the heart of Zepto's business model. While revenue growth, order economics and quarterly profitability metrics have steadily improved, the scale of investments required to sustain that growth has kept the company firmly loss-making.
Despite the continued distance from profitability, Zepto is moving ahead with its public market plans. The company is seeking a public offering that will include a fresh issue of shares worth ₹8,010 crore, alongside an offer-for-sale (OFS) component that will allow investors such as Nexus Venture Partners to offload up to 11.35 crore shares.
The company plans to deploy a significant portion of the IPO proceeds toward expansion and operational commitments. Of the total fresh issue proceeds, ₹1,735 crore has been earmarked for lease liabilities, while ₹1,629 crore will be used to open additional dark stores, signalling that growth remains a key priority even as profitability continues to remain out of reach.
The continued expansion plans also underscore the inherently capital-intensive nature of the quick-commerce business, where scale remains critical to improving unit economics. Competition has intensified significantly over the past two years, with incumbents such as Blinkit and Instamart battling for market share while deep-pocketed entrants like Reliance, Amazon and Flipkart have also entered the fray.
The competitive intensity has forced players to continue investing heavily in dark stores, delivery infrastructure, discounts and customer acquisition, making access to capital a strategic necessity rather than merely a growth lever.
