In an unusual show of resolve, mutual fund managers appear to have concluded that the valuation sought by Zepto for its initial public offering (IPO) is unworkable. This is after the quick-commerce company tempered its expectations and sought a valuation of about $3 billion, less than half the $7 billion it had initially hoped for. The fund managers’ realism is refreshing. It is hard to recall another recent instance in which they have so firmly resisted the blue-sky narratives of promoters. On the contrary, they have often backed richly valued issuances, only to see investors lose money. This time, their reluctance appears to have forced Zepto to hold back its stock-market debut.
Fund managers cannot, of course, be expected to get every call right. Start-up business models are difficult to assess, and the absence of comparable companies often makes their prospects and valuations harder to judge. In Zepto’s case, intense competition from Blinkit, Swiggy Instamart, and others appears to have made investors unwilling to take the plunge without an adequate margin of safety. The caution is understandable. The record of listed start-ups has been mixed: an FE analysis of 38 such companies shows that 14 are trading below their IPO prices, with a few at less than half their issue price. Nor is it only the hypercompetitive quick-commerce market — where several players are jostling for space in the consumer’s cart — that is keeping investors grounded. Stock-market uncertainty and the relatively lacklustre performance of mutual funds through much of 2025 and 2026 have also played a part. This is not a “rising tide lifts all boats” environment in which even sectoral laggards can count on a generous valuation.
One hopes mutual funds will display similar assertiveness while voting on corporate resolutions. To be sure, dissent has increased steadily: the share of mutual fund votes cast against company resolutions rose from 2.5% five years ago to a record 13.1% in the year ended March 2026. This is encouraging, especially since funds now own a significant share of Indian equities. Yet, fund managers need to be far more vocal. A closer look at voting patterns shows that it is not the industry’s big players but newer entrants such as Groww, Angel One, Navi, and Zerodha that have been more proactive, opposing as many as three in every 10 resolutions. Larger fund houses — including SBI MF, ICICI Prudential MF, and Aditya Birla Sun Life MF — appear less discerning, with dissent rates below 4%.
That is disappointing because the six largest players together command about 60% of the industry’s assets under management and should lead by example. Nobody expects fund managers to blindly follow proxy advisory firms, but the divergence in voting patterns is difficult to explain. Indeed, mutual funds were once so passive that the regulator had to require them to vote on all company resolutions. As custodians of retail savings, they must exercise their influence more consistently — not merely when pricing an IPO, but also when holding corporate managements to account. That would make them better stewards of investors’ money and help strengthen corporate governance.This is what institutional maturity is all about: The custodians of the largest and steadiest source of capital in the primary market, using that heft to impose discipline on private-market exuberance instead of underwriting it. A market where the buyer can finally say no is a healthier one.