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Zomato leading in valuation from Swiggy says HSBC Global Research

March 13, 2019
zomato,swiggy,HSBC Report,thevctalks,,zomato valuation,the vc talks

As India is opting the food home delivery to an extent level hence the battleground becomes more interesting for the food tech companies; majorly between the 2 giants of this vertical – Zomato and Swiggy.

According to HSBC Global Research, Zomato is leading Swiggy with the valuation of $3.6-Bn considering the fact that the valuation projection will be tested once the company raises the fresh capital.

Swiggy was ruling the food tech space in India with a valuation of $3.4-Bn after its funding round in December 2018 but this new report changed the equation.

After the fundamental change in the Business of Zomato, the percentage share of food delivery to Zomato’s revenue jumps to 70%.

Given the scope of its recent expansion and the need for further funding, we value Zomato on a discounted cash flow basis, at $3.6 Bn (at a marginal 9% premium to its competitor Swiggy as of the latest round of funding) versus $0.9 Bn earlier due to the change in business focus.

– HSBC Report

The glimpse of activities in the past few months:

  • Zomato has sold its UAE business to German firm Delivery Hero for $172 million.
  • Rumors of Swiggy’s stake in Uber Eats.
  • Swiggy entered into the Hyperlocal space with the buyout of Dunzo.
  • Zomato reached to 100 cities over the country.

We expect employee costs and delivery fee costs per order to gradually decline with larger acceptance of these platforms and an increase in the number of orders per person. We estimate 300 Mn food-delivery orders a month by FY24, with Zomato enjoying 37%-40% market share.

– HSBC Report said

Apart from the delivery business, Zomato is playing well with its subscription model “Zomato Gold” which almost got doubled and expects $20-25 million in revenue by the end of 2019. Also, Zomato is planning to expand its business in 500 cities in the next 24-36 months.

“The company currently loses about Rs24 per order, compared to Rs45 per order six months ago. We do not subscribe to the notion of our valuation defining success or failure for us — we are focused on execution, and we believe that in the long term, customer love is all that matters.”

– Deepinder Goyal, CEO and founder, Zomato

[The development was reported by ET.]

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