HSBC’s report said it valued IE’s stake in Zomato at $1.1 billion. It said in a blue-sky scenario, India food delivery could be valued at $30 billion in the long term, implying IE’s share in Zomato at $3.5 billion. It said this is an increase of $2.4 billion or 45 per cent of IE market cap. In that scenario, Zomato could be valued at $15 billion, according to the report.
“This is the blue-sky scenario and the only one where IE stock can create value from the current market valuations,” said the report. “However, we believe the scenario assumptions are too simplistic and there are multiple pitfalls.”
The report assumes the food delivery industry presently is valued at over $10 billion. However, this adds only $1.1 billion to the valuation of IE (Rs 750 per share).
While valuing Zomato, the report has referred to the Chinese food delivery giant Meituan, which is valued at $200 billion with 70 per cent market share in delivery in mainland China, but with other instore businesses as well. Adjusting for everything, the mainland China food delivery market is currently valued close to $200-250 billion, said the report.
“Usually, mainland China is 6x larger than India, on most economic parameters. So in a few years, in a bull case scenario, India’s food delivery could be worth $30 billion,” said the report.
In January, Info Edge India, said that Zomato had signed a definitive agreement to undertake a primary fundraise of up to $150 million from Antfin Singapore Holdings and its affiliates. Info Edge had said in an exchange filing the transaction valued Zomato at a pre-money valuation of $3 billion.
However, in August, Ant Group, which is the payment and finance-focused company of the Chinese e-commerce giant Alibaba, recently said in its initial public offering (IPO) prospectus at the Hong Kong stock exchange that a change in foreign investment regulation in India led to “further evaluation” of the timing of its additional investment in food delivery start-up Zomato.
The same month, Zomato raised Rs 184 crore from existing investor Foodie Bay Employees ESOP Trust, according to the regulatory documents. The Deepinder Goyal-led firm is also planning to raise capital from MacRitchie Investments Pte Ltd by allotment of 15,188 shares. MacRitchie is an investment holding company, an indirect wholly-owned subsidiary of Singapore-based Temasek Holdings.