Zepto IPO valuation cut lifts Swiggy, Eternal shares as

Zepto, a quick commerce player, had received the Sebi nod for its IPO in April.

Shares of Swiggy and Eternal have rallied today after reputed news channel reported on July 27 that Zepto is testing waters at an post-money IPO valuation of $3 billion from the $5 billion it was initially targeting, reinforcing investor expectations that the quick commerce price war may be entering a more disciplined phase.

Market participants believe a lower valuation—and potentially a smaller fund raise—signals that public market investors are becoming less willing to finance the aggressive cash burn that has fuelled Zepto’s rapid expansion.

That, in turn, could reduce the company’s ability to keep spending heavily on discounts, dark-store expansion and customer acquisition, easing competitive pressure on listed rivals Swiggy and Eternal.

The market welcomed the prospect of a more rational competitive environment. At around 1 pm on July 28, Swiggy shares were up nearly 4% at Rs 268, while Eternal gained 3% to Rs 305.

Even though Amazon and Flipkart have also intensified competition into the quick-commerce space, unlike Zepto, the two listed rivals already have sizeable balance-sheet firepower to compete if needed. Swiggy had around Rs 10,800 crore in cash and short-term investments at the end of June quarter, while Eternal held roughly Rs 16,000 crore of cash and liquid investments, giving both companies ample financial flexibility even as they work towards improving profitability.

Reputed news channel had reported on July 27 that Zepto’s management had begun discussions with investors around a revised post-money valuation of about $3 billion (around Rs 29,000 crore), implying a pre-money valuation of roughly $2.5 billion (around Rs 24,000 crore).

“Talks between the firm and investors have begun and discussions are expected to continue this week. The bids have to come in, so no final call has been taken yet on the valuation or deal structure. This is still work in progress,” one person familiar with the discussions

Another person said that if the book is built around the revised valuation, the IPO is likely to comprise a primary issue of around Rs 5,000 crore along with a relatively small secondary component.

The latest discussions mark a sharp reset from earlier expectations. Zepto had received Sebi’s approval for its IPO in April, when market estimates pegged its valuation at around $7 billion. Subsequently, reported on July 17 that existing investors including Norges Bank and Motilal Oswal were evaluating investments at a pre-money valuation of about $4.3 billion and a post-money valuation of around $5.1 billion.

Investors say the valuation reset reflects a shift in public market sentiment. Unlike private investors, public market shareholders are increasingly rewarding sustainable growth and profitability over market share bought through heavy cash burn.

That is viewed as a positive for Swiggy and Eternal, both of which have already raised substantial capital, have listed balance sheets and are under growing pressure to improve returns rather than simply maximise growth at any cost.

The optimism has also been reflected in recent stock performance. Swiggy has gained around 6% over the last two trading sessions, while Eternal has risen over 9%, as investors reassess the competitive landscape ahead of Zepto’s market debut.

Disclaimer: Moneywealth research provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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