HSBC arm slashes Zomato valuation to $500 million
In another setback to India’s fledgling startup industry, HSBC Securities and Capital Markets (India) has slashed the valuation of restaurant search service Zomato by 50 percent to USD500 million. The HSBC’s brokerage arm has raised grave concerns over Zomato’s steep valuation in a note titled ‘India Internet - Lot of Growth but Slim Pickings’. The report which covers Info Edge — that holds nearly 50% stake in Zomato — states: “Zomato is present in 23 markets so early on and none is profitable, which implies that to address both the investments in last-mile delivery and losses in international operations, fund-raising will be a continuous phenomenon, suggesting current valuations don't make much sense. We do a discounted cash flow (DCF) analysis and value the business at 50% lower to the USD1-billion valuation.”
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In another setback to India’s fledgling startup industry, HSBC Securities and Capital Markets (India) has slashed the valuation of restaurant search service Zomato by 50 percent to USD500 million. The HSBC’s brokerage arm has raised grave concerns over Zomato’s steep valuation in a note titled ‘India Internet - Lot of Growth but Slim Pickings’. The report which covers Info Edge — that holds nearly 50% stake in Zomato — states: “Zomato is present in 23 markets so early on and none is profitable, which implies that to address both the investments in last-mile delivery and losses in international operations, fund-raising will be a continuous phenomenon, suggesting current valuations don't make much sense. We do a discounted cash flow (DCF) analysis and value the business at 50% lower to the USD1-billion valuation.”
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