Valuations of privately held companies are a matter of debates globally as well as locally. While experts and observers frown upon skyrocketing valuation of startups such as Uber, Flipkart, and many others, investors remain undeterred in writing investment cheques on massive valuations.
Differences over valuations between investors and experts tracking the segment are not new. This time, brokerage firms are divided over valuation of Indian foodtech major Zomato. Earlier this month, Morgan Stanley’s research unit had spiked Zomato valuation to $2.5 billion, almost 2.5X from its valuation during last funding round in 2015.
Two weeks later, HSBC Securities and Capital Markets has raised Zomato valuation to $700 million from $500 million as food ordering and delivery set to grow this year. It estimates the foodtech aggregator market to grow at a compound annual growth rate of 63 per cent to $1.5 billion. It was first reported by Mint.
Over the past six months, three different brokerage firms have valued Zomato differently. In September last year, Japanese brokerage firm Nomura’ India arm had projected its valuation to $1.4 billion by March 2019.
Global investment banking firm Jefferies had marked up the valuation of foodtech major to $865 million from $500 million in November last year.
These difference in valuations are surfacing amidst Alibaba’s Ant Financial plans to infuse $200 million in the Gurugram-based company. Zomato has reportedly been engaged with Ant Financial to raise the aforementioned amount for over five months.
Last year proved to be pivotal for foodtech Unicorn. The Gurugram-based company had launched products such as Zomato Gold and also turned profitable in all markets it operates.
The company achieved profitability across the 24 countries where it operates in September. To take on rival Swiggy, it started a commission-free campaign for about 70 per cent of its restaurant partners.
Zomato also launched subscription-based memberships such as Zomato Treats and Gold. While priced at Rs 249 – Treat lets subscribers avail a free dessert with every meal they order across 16 cities in India, Gold membership is an exclusive dine out and social drinking membership program.
Of late, food ordering and delivery space is getting competitive as Bengaluru-based Swiggy and Zomato are fighting aggressively to woo users as well as restaurant partners. To take on rival Swiggy, the Deepinder Goyal-led company had announced a commission-free campaign for restaurants. Homegrown ride-hailing major Ola had also entered the food ordering space by acquiring foodpanda.