Zomato valuation marked up to $865 mn from $500 mn by Jefferies

By: | Published: November 25, 2017 4:25 AM

Equity research firm Jefferies has marked up the valuation of online restaurant discovery and food delivery firm Zomato to $865 million from $500 million earlier.

Zomato, Equity research firm, Jefferies, EBITDA , Nomura Financial Advisory,Vy Capital, Singapore Temasek Holdings, india, online ordering businessIn September, equity research firm Nomura Financial Advisory and Securities India had raised Zomato’s valuation to .4 billion from billion. (IE)

Equity research firm Jefferies has marked up the valuation of online restaurant discovery and food delivery firm Zomato to $865 million from $500 million earlier. According to the equity research firm, the potential consolidation in online ordering, triggered by Zomato’s aggressive pricing strategy and fresh fund-raising at higher valuation, are potential catalysts. In an email response, a Zomato spokesperson said, “We have never subscribed to the valuation game. We are focused on our work and on creating value for our users.” The equity research firm further broke down valuation by assigning value of $470 million to Zomato’s advertisement business, as the valuation of the online ordering business stood at $395 million. “Strong momentum is Zomato’s delivery business — consolidation driven by aggressive pricing strategy — will be a key trigger in driving the overall business,” said analysts in the report. Moreover, the report pointed out that Zomato, which posted an EBITDA loss of Rs 91.1 crore on revenues of Rs 60.4 crore for the year ended March 2017, is expected to reduce its losses by 9.7% to Rs 91.1 crore, as revenues increase nearly two-fold to Rs 164.4 crore in FY18.

In September, equity research firm Nomura Financial Advisory and Securities India had raised Zomato’s valuation to $1.4 billion from $1 billion. The increase in valuation was 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. It should be noted that Zomato is currently on a lookout 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, 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 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.

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