- A Growing Business That Still Reports Losses
- The ₹2,160 Crore Debt Repayment Plan
- Can Zetwerk’s Business Model Support Better Margins?
- What Should Retail Investors Watch After the IPO?
- The Bottom Line
Zetwerk Manufacturing Businesses Limited has filed its RHP for a ₹5,012 crore IPO and fixed the price band at ₹143-₹151 per share. The IPO is scheduled to open on October 15 and close on October 19, 2026.
The issue has two parts:
- Fresh issue of ₹2,830 crore: New shares issued by the company to raise money for its business.
- Offer for Sale (OFS): Existing shareholders, including promoters and early investors, will sell up to 14,45,25,036 shares.
But beyond the IPO size and price band, one question deserves closer attention: Can Zetwerk use the money raised to reduce its debt and turn its growing business into a profitable one?
A Growing Business That Still Reports Losses
Zetwerk has built a large business. In FY26, it generated ₹15,913.32 crore in revenue from operations and earned ₹421.34 crore in adjusted EBITDA. EBITDA is a measure of operating earnings before interest, taxes, depreciation and amortisation.
Yet, the company reported a restated net loss of ₹964.4 crore for the same year.
Why can a company earn money from its operations but still report a loss?
Imagine a restaurant that sells thousands of meals and earns a profit from its daily business. But the owner has borrowed heavily to expand, and the interest payments on those loans eat into the earnings. The restaurant may run well and still end up with a loss after all its expenses are counted.
Zetwerk faces a similar challenge. In FY26, it incurred ₹366.22 crore in finance costs, mainly related to borrowings. These interest expenses reduce the money left over after its operating earnings.
This does not mean debt is the only reason for the net loss. However, the high finance costs help explain why positive operating earnings have not translated into a net profit.
That brings us to the most important part of the IPO: what Zetwerk plans to do with the fresh money.
The ₹2,160 Crore Debt Repayment Plan
Of the ₹2,830 crore that Zetwerk plans to raise through the fresh issue, ₹2,160 crore is earmarked for repaying existing debt. That is more than three-fourths of the fresh issue.
The planned allocation is:
- ₹1,300 crore to repay borrowings at the parent company level.
- ₹860 crore to repay borrowings at nine operating subsidiaries.
Why does this matter?
When a company repays a loan, it can reduce the interest it needs to pay in the future. That leaves more of its earnings available for other expenses, investment or profit.
For Zetwerk, lower interest costs could make a meaningful difference because it already generates positive adjusted EBITDA.
However, the benefit will depend on how much debt is actually repaid, the interest rates on those loans and the timing of repayment. The company will also continue to incur other expenses.
The key point is that debt repayment could improve Zetwerk’s profitability, but it will not guarantee a turnaround on its own. The business must also perform well and manage its costs and cash requirements.
Can Zetwerk’s Business Model Support Better Margins?
Debt repayment can ease financial pressure, but Zetwerk must continue to run its business efficiently to sustain improvement.
So, how does the company operate?
Think of Zetwerk as a manager that helps large companies get products manufactured. Instead of relying only on factories it owns, it connects customer orders with a network of independent manufacturers.
Its software platform, Zetwerk OS, helps coordinate orders, production and quality checks across a network of more than 6,979 third-party suppliers in 26 countries.
For example, if a company needs solar components or power equipment, Zetwerk can help arrange production through its manufacturing network.
It also operates 26 owned manufacturing facilities across four countries. This combination gives it access to outside manufacturing capacity while allowing it to produce specialised products in its own facilities.
The model can help Zetwerk expand without having to own every factory. But it still needs to manage production costs, supplier payments, inventory and the time it takes customers to pay.
That last point is particularly important. Even when a company reports operating earnings, money can remain tied up in goods (products) waiting to be sold or payments yet to be received.
Therefore, investors need to watch not only whether Zetwerk grows, but also whether it can manage the cash required to support that growth.
What Should Retail Investors Watch After the IPO?
For investors considering Zetwerk at ₹143-₹151 per share, the debt repayment plan is an important part of the story. But its success will depend on what happens next.
Before applying, investors can use this IPO analysis guide to understand how to evaluate a company’s financial performance, debt and growth prospects.
Three things deserve attention:
- Debt repayment: Does Zetwerk use the planned ₹2,160 crore to reduce its borrowings as intended, and how much does that lower its interest costs?
- Operating margins: Does adjusted EBITDA grow alongside revenue, showing that the company is improving its operating performance?
- Working capital: Can Zetwerk manage inventory and customer payments efficiently without needing to borrow more money to fund everyday operations?
These measures will help investors judge whether the IPO is strengthening the business financially or mainly providing temporary relief.
The Bottom Line
Zetwerk generated more than ₹15,900 crore in revenue from operations in FY26, yet it reported a substantial net loss and continued to face cash requirements.
Its proposed ₹2,160 crore debt repayment could reduce interest expenses and give the business greater financial flexibility. But a lasting improvement will require more than paying off loans.
The real test is whether Zetwerk can combine lower debt costs with stronger margins and better cash generation. If it succeeds, its growing business could translate into sustainable profits. If it does not, the company may continue to face financial pressure despite the IPO.
To explore other companies preparing to go public, check INDmoney’s upcoming IPOs.