Equity research firm Nomura Financial Advisory and Securities India on Friday raised online restaurant discovery and food delivery firm Zomato’s valuation to $1.4 billion in its latest report, from $1 billion. The increase in valuation is based on the last fund exercise taken up by the company in September 2015. Zomato had raised $60 million from Singapore’s Temasek Holdings and existing investor Vy Capital.
In its report, Nomura said, “Zomato is a globally scalable business, which utilises the network effects of its restaurant discovery platform, enabling monetisation in food ordering at low customer acquisition costs.”
The equity research firm in the report further stated that it estimates Zomato revenues could grow 6.5 times to more than $300 million over FY17-22. As per the report, the growth in revenue will be driven by 4.5 times jump in the company’s advertising revenue which is expected to touch $38 million in FY17, besides a 15 times spurt in revenue of its food ordering business at $9 million in the same period.
It should be noted that Zomato is currently on a look out for fresh funds. In March this year, Zomato’s plans to raise fresh funds hit a dead-end after the company failed to find investors willing to infuse funds at a valuation of $1 billion. In November 2016, the company had appointed Morgan Stanley to initiate the process of fund raising.
In July 2016, equity research firm Jefferies had marked down the valuation of Zomato. The research firm, in its report, had valued one share of Zomato at Rs 130 against Rs 191 a year ago. The company’s valuation was halved to $500 million. This was in line with HSBC Securities and Capital Markets downgrade in May last year. HSBC had slashed the valuation of Zomato by 50% to $500 million.
In April this year, Zomato Media — the food ordering arm of Zomato, reported an 80% jump in revenue to $49 million, or Rs 11.38 crore, for the year ended March 31, 2017, according to a blog post by the company. Cash-burn or operating expenses of the company fell 81% to $12 million in FY17 from $64 million a year ago.