Zetwerk's IPO raised ₹5,012 crore. At most 13% of it is for growth.
Zetwerk is a real business with a real order book, listed with a balance-sheet repair attached. Here is who the IPO money is for.
Summary
- Zetwerk's ₹5,012 crore IPO sends 43% to lenders and 43.5% to selling shareholders, leaving the company about ₹670 crore, or 13%, before issue costs.
- The FY26 loss of ₹1,606 crore is mostly accounting, but operating cash flow has been negative in every period since FY24.
- At 1.6 times revenue the stock is priced as a low-margin sourcing business, and the line to watch is operating cash flow for the first half of FY27.
Zetwerk listed on the NSE and BSE on 23 October 2026, and every figure here is as of that day.
Co-founded in 2018 and led by its promoters, Amrit Acharya and Srinath Ramakkrushnan, Zetwerk sources industrial and consumer goods through suppliers and its own plants.
The business is real. FY26 revenue was ₹15,913 crore, up 40%, and the manufacturing order book was ₹13,062 crore on 30 June 2026. The book closed 3.10 times subscribed, but the more telling number is how the ₹5,012 crore is split.
Zetwerk's IPO at a glance, as of 23 October 2026 (listing day)
| Item | Figure |
|---|---|
| Issue size | ₹5,012.33 crore: fresh issue ₹2,830 crore, offer for sale ₹2,182.33 crore |
| Market value at issue price | About ₹25,583 crore (about $2.7 billion) |
| Subscription at close, 19 October | 3.10 times overall; institutions 4.71 times; retail 0.77 times |
| Listing day on the NSE | Opened at ₹159.25, closed at ₹138.25 |
Where the ₹5,012 crore goes
Lenders and selling shareholders take almost all of it. The offer for sale never reaches the company.
Where the IPO money goes, as of 23 October 2026
| Use | ₹ crore | Share of the issue |
|---|---|---|
| Repay borrowings of the company and its subsidiaries | 2,160 | 43% |
| Paid to selling shareholders (offer for sale) | 2,182 | 43.5% |
| Left in the company for acquisitions, general corporate purposes and issue costs | About 670 | 13% |
| Total | 5,012 | 100% |
Less than a seventh of the money raised stays with the company to grow. Issue costs come out of that ₹670 crore too, and the IPO tracker Investorgain puts what is left at about ₹534 crore.
Less than a seventh of the money raised stays with the company to grow.
The terms moved against growth between filings. Zetwerk's updated papers in August had a ₹2,600 crore fresh issue, with ₹1,800 crore for debt. The final prospectus lifted the fresh issue to ₹2,830 crore, but debt repayment rose faster, to ₹2,160 crore.
So the money left for the company fell from about ₹800 crore to about ₹670 crore as the issue grew. New money against money changing hands is the same test we applied to Rentomojo's IPO in September.
Who is selling, and at what price
The sellers are mostly the early institutional backers. At the issue price, the prospectus share counts give Lightspeed's funds about ₹427 crore and Peak XV's about ₹354 crore.
Inc42 puts the earliest backers' returns at roughly 10 to 38 times cost, with Kae Capital and Kalysta at the top. The two promoter founders are selling about ₹430 crore of stock between them, at the issue price.
Greenoaks is not selling. Its four funds held about 20% before the offer, the largest holding in the company, the prospectus shows. The biggest holder staying in tells me more than most of the commentary on this listing.
The newest private money sits on the other side. The prospectus shows Bharat Value Fund paid ₹171 a share for its ₹500 crore pre-IPO stake on 2 April 2026. At ₹151 it is about 12% under water on paper, six and a half months on, unless its terms carry undisclosed protection.
At the listing-day close the gap was about 19%. Institutions bid 4.71 times their quota and retail investors 0.77 times. I read that as smaller investors doing the same arithmetic.
Why the loss matters less than the cash burn
The FY26 net loss was ₹1,606 crore, up from ₹371 crore. About ₹836 crore of it is an exceptional charge, mainly a non-cash share-conversion adjustment, the company says. Another ₹642 crore is the civil infrastructure business Zetwerk is selling, including a ₹453 crore impairment.
Take those out and the continuing business is close to break-even. Before its share of joint-venture losses, exceptional items and tax, it lost ₹41.1 crore in FY26, down 31% from ₹59.8 crore.
Adjusted climbed to ₹421 crore from ₹323 crore. That measure is operating profit before interest, tax, depreciation, share-based pay and one-off items, and it leaves out other income.
Adjusted EBITDA against operating cash flow (₹ crore), as of 23 October 2026
| Period | Adjusted EBITDA | Operating cash flow |
|---|---|---|
| FY24 | 97 | -281.5 |
| FY25 | 323 | -386.3 |
| FY26 | 421 | -681.5 |
| Q1 FY26 (April to June 2025) | 31 | -796.4 |
| Q1 FY27 (April to June 2026) | 103 | -506.2 |
Cash is another matter. Operating cash flow has been negative in every period disclosed, about ₹1,856 crore from FY24 to the first quarter of FY27. On my arithmetic, the FY26 gap between adjusted EBITDA and operating cash flow is about ₹1,100 crore.
That gap is mostly working capital, plus cash used by the civil infrastructure business being sold. Interest is paid on top, in the financing line. The order book grew from ₹8,629 crore in March 2025 to ₹13,062 crore in June 2026, and orders tie up stock and receivables before they pay.
The first quarter is the heavy one. A year earlier it used ₹796 crore, more than the whole of FY26, so ₹506 crore is better but still large.
Here the debt repayment earns its place. By Swastika Investmart's estimate, clearing expensive working capital loans could cut finance costs by ₹180 crore to ₹220 crore a year. On my illustrative arithmetic, with all else equal, that would turn the continuing loss into a profit.
Why the market pays only 1.6 times revenue
At ₹25,583 crore on ₹15,913 crore of revenue, Zetwerk was priced at about 1.6 times FY26 sales. Swastika puts listed electronics manufacturing peers at 3.5 to 6 times sales. Still, on my arithmetic, its market value alone is about 61 times FY26 adjusted EBITDA.
The discount comes from what the revenue is. Products made by third-party suppliers were about 80% of FY26 revenue, the prospectus shows, and 75.7% in the first quarter of FY27. Goods bought for resale took ₹9,880 crore, 61% of total expenses.
Zetwerk acts as principal in those contracts, so it books them as gross revenue. Rahul Sharma of 99 told Inc42 in August that the suits the business. Avinash Gorakshakar of Avinash Mentor Research pointed to Zetwerk's fulfilment, quality and credit responsibilities.
The result is a ₹15,913 crore top line with a 2.65% EBITDA margin, which the market prices as a trading margin.
The manufacturing segment is the better business. Its FY26 EBITDA was ₹565 crore, a 6.03% margin, more than the whole company's ₹421 crore. Within it, design-led (ODM) contracts, where Zetwerk also designs the product, rose to 13.9% of manufacturing gross merchandise value in FY26, from 8.3%.
ICICIDirect Research rated the issue Subscribe and expects manufacturing, especially own manufacturing, to drive margin improvement. Gorakshakar told Inc42 that "Zetwerk is not attempting to become an asset-heavy manufacturer overnight", and suggested about 1.6 times enterprise value to revenue may be fair.
BP Equities rated the issue Avoid, citing "the absence of positive earnings and limited visibility on near-term profitability".
My verdict, and the three risks I would price in
As I read it, Zetwerk is a genuine business with a real order book, and it has listed with a balance-sheet repair attached. It is priced as a sourcing platform because most of its revenue is sourcing. Paying down debt with 43% of the proceeds is the right call, and probably the biggest lever on FY27 earnings.
Still, when about 87% of the money goes to sellers and lenders, the IPO is a liquidity event for the old shareholders and a recapitalisation for the company. Investors should price it that way, and not as a growth round.
- Growth is using cash faster than it makes it. Operating cash flow was minus ₹506 crore in the first quarter of FY27, including the civil business, on 55% revenue growth. New orders still need funding before they pay. If growth holds near 40% to 55%, working-capital build could absorb the relief within a few quarters.
- The civil infrastructure exit is still costing money. That business lost ₹669 crore in the first quarter of FY27 alone, and Zetwerk expects to complete its sale within 12 months. CRISIL Ratings, which has Zetwerk on a negative outlook, warned in June that higher-than-expected provisions or losses from the exit could hurt the group. Until the sale closes, its cost is not capped.
- A higher multiple needs a change in mix the numbers do not yet show. The case for a re-rating is that the manufacturing segment, at about a 6% margin, and its design-led work keep outgrowing the low-margin rest. If they do not, the group margin stays near 2.65% and the discount to peers stays justified.
The number I am watching next
The line I want is operating cash flow for the first half of FY27, Zetwerk's first half-year report since listing. Because the first quarter is the heavy one, the fair test is against the first half of FY26.
I want the narrower than a year earlier while revenue grows, and ideally heading towards zero. That would mean the working-capital model is maturing and paying lenders first worked. If the figure stays deeply negative, the IPO will have swapped lenders for shareholders and left the cash cycle as it was.
If the figure stays deeply negative, the IPO will have swapped lenders for shareholders and left the cash cycle as it was.
Next to that line, the listing-day price is noise. The stock opened about 5% above its issue price on the NSE and closed about 8% below it.
What a founder planning a listing can take from this
Public investors read what an IPO's money is for before they read the story. If most of it repays debt and pays out early holders, expect it to be priced as a refinancing.
Fix the cash cycle, know your revenue mix and how you book it, and settle both in an IPO readiness review before anything is filed.
The Capital Pulse reads one Indian PE or VC deal each week. Earlier deal reads sit in Funding intelligence.
This piece is for information only. It is not investment advice.
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