Valuation Showdown: Domestic Funds Demand Massive Cut as Zepto IPO Faces Sticking Point

Valuation Showdown: Domestic Funds Demand Massive Cut as Zepto IPO Faces Sticking Point​

Top domestic mutual funds and large insurers are creating significant friction over the valuation of quick commerce startup Zepto's proposed Initial Public Offering (IPO). Asset managers, who represent some of the largest investors in recent listings, have reportedly indicated that they would be hesitant to subscribe even if Zepto lowers its expectations further. This intense negotiation process is potentially complicating the near-term launch of the highly anticipated IPO.

##The Valuation Chasm: Funds Seek Lower Price Point

Zepto has offered to reduce its valuation expectation to approximately $4-5 billion. This figure is substantially lower than the peak valuation of $7 billion recorded in October 2025, which occurred when the company successfully secured a $450-million funding from US pension fund CalPERS.

However, sources indicate that top domestic mutual funds and large insurers are demanding valuations that are 30 to 40% lower than this reduced offering price. This major disconnect has prompted bankers involved in the IPO and one of Zepto's prominent investors to intensify efforts to mediate and bridge the gap between the parties.

##IPO Timeline and Investor Influence

Zepto is currently aiming for its IPO, which is valued up to ₹8,010 crore, over the next two weeks. The company has been working to conclude negotiations with asset managers by Tuesday, though consensus has yet to be reached among the mutual funds.

The participation of large domestic funds and insurers is viewed as critical for the successful execution of the IPO. These institutions have historically served as major players in anchor books and pre-IPO funding rounds, lending them significant influence in share sale negotiations with companies like Zepto. A representative from a large mutual fund stated that if they secure the commitment of the majority of other major funds, they will re-evaluate their position on the offering.

##Peer Comparison Under Scrutiny

During discussions, it was reported that Zepto reportedly sought to benchmark its IPO valuation against listed competitors Eternal and Swiggy. However, financial experts are questioning this logic, pointing out that while those rivals operate in food delivery, which is a core part of their business model and valuation, Zepto focuses exclusively on the ultra-competitive quick commerce market covering groceries and everyday items.

Fund managers expressed reservations about agreeing to elevated valuations given the post-listing stock performance of certain new-age businesses. For instance, Swiggy, which listed in November 2024, is currently trading at ₹251.50 per share. This reflects a significant decline from its IPO price of ₹390 apiece, translating to about 35% below the initial offering value.

##Market Waryness Over High Valuations

The reluctance among some asset managers stems from concerns over subscribing to high valuations in similar new-age company issuances. Mutual funds have previously voiced opposition when asked to invest at peak valuations in previous analogous listings. This caution suggests a deep underlying prudence regarding the risk associated with rapidly scaling, quick commerce businesses in the current market climate.