The turnaround trap

Summary: A company turning profitable after its IPO may look like a successful turnaround. But this story examines why better business numbers have not necessarily translated into better returns for the investors who bought in.

Summary: A company turning profitable after its IPO may look like a successful turnaround. But this story examines why better business numbers have not necessarily translated into better returns for the investors who bought in. Since 2021, 36 loss-making companies have listed on Indian exchanges with a full audited year of financials before their float. Of these, 20 are profitable today, at both the operating and the bottom line. In 18 of those 20, the turn came from the business improving, and the median company took two years. The prospectus, on the whole, was kept. What Zepto’s investors turned down Zepto was supposed to be this year’s marquee listing, the only pure play in India’s fastest-growing quick commerce segment. In July, the mutual funds that anchor an IPO valued the business at about a third of the Rs 66,500 crore struck in a private round nine months earlier. Zepto pulled the float. The business is improving. Zepto’s operating loss per order fell from Rs 136 in FY25 to Rs 79 in FY26, the number that decides whether quick commerce works. But orders are