Swiggy shares have surged nearly 24% in July, marking their best month since the company listed in November 2024. Meanwhile, industry leader Eternal has gained 17%, its strongest monthly advance in over two years, as investor interest shifts amid Zepto's IPO challenges.
The rally in Swiggy and Eternal shares is driven by growing pressure on Zepto, whose planned initial public offering has faced resistance from institutional investors concerned about excessive cash burn and high valuation expectations. Reports indicate that top domestic mutual funds have pushed back against the pricing sought by Zepto, while large institutional investors have suggested a valuation significantly below its last private funding round.
The valuation currently under discussion for Zepto is between $2.5 billion and $3 billion, a sharp decline from the $7 billion valuation during its $450 million funding round in October 2025, led by US-based pension fund Calpers. This is also lower than the previously discussed range of $3.5 billion to $4 billion. Zepto is negotiating the IPO pricing and may defer the issue if the gap between its expectations and investor demand does not narrow.
“Zepto will have to focus on lowering the cash burn now, typically resulting in lower growth and market share loss to incumbents.”
Rashi Talwar Bhatia, Zepto investor and Asmore CIO
Despite not calling off the offering, Zepto faces a time constraint with its IPO draft validity running only until August 21. The company must decide whether to accept a lower valuation, reduce the issue size, or delay the listing. Zepto shares also fell more than 20% in the week leading up to the latest IPO discussions, indicating weakening investor appetite.
For Swiggy and Eternal, the funding pressure on a major rival presents an opportunity to consolidate their positions in India's fast-growing consumer industry. Zepto also competes with Amazon.com Inc.'s India operations and Tata Group's BigBasket. A cash-strapped competitor could particularly benefit Swiggy, as it emerges as the second-largest player.
“A cash-strapped competitor could help Swiggy the most, because the company emerging as the second-largest player would typically be the biggest beneficiary.”
Rashi Talwar Bhatia, Zepto investor and Asmore CIO
Swiggy's ability to finance expansion may strengthen its positioning, even as its quick-commerce operations continue to incur losses. Nomura analysts noted that Swiggy's Instamart intends to trade margin for growth, with cash losses expected to continue until at least the fiscal year ending March 2028. However, these losses can be offset by cash generated from its food-delivery business.
Background
Zepto's IPO challenges come at a time when the quick-commerce sector in India is witnessing intense competition. The company's struggle to meet valuation expectations highlights the broader market dynamics where established players like Swiggy and Eternal are poised to capitalize on any weaknesses shown by their rivals.
The current situation highlights an increasingly divergent funding environment. Zepto is under pressure to curb its cash burn, while Swiggy appears willing and able to continue spending for growth. If this divergence leads to slower expansion by Zepto, Swiggy and Eternal could capture a larger share of India's quick commerce market.
