New Delhi: Nomura Financial Advisory and Securities (India) Pvt. Ltd has valued Zomato Media Pvt. Ltd at $1.4 billion at a time the food technology start-up is in talks with Chinese payments firm Ant Financial Services Group to raise $100-$200 million.

“Zomato, in our view, is the only global scalable India player with potential to target spending across the entire restaurant value chain—advertising, food ordering and table booking, while demonstrating growth with low customer acquisition costs," Nomura analysts Ashwin Mehta and Rishit Parikh wrote in a report dated 15 September. Mint has reviewed a copy of the report.

Mint reported on 5 September that Zomato was likely to be valued at $800-900 million in its fund-raising talks with Ant Financial, an arm of Alibaba Group Holding Ltd.

Zomato was valued at around $1 billion when it raised $60 million from Singapore’s state-run investment firm Temasek Holdings Pte. Ltd in September 2015 in its last fund-raising.

“We feel happy to see our work being recognized and validated by a renowned name like Nomura," a Zomato spokesperson for Zomato said in response to queries from Mint.

“We have had a standing start to our food ordering business, and now more than half of the organization focuses on the transactions business (food ordering and table reservations). The advertising business has also matured and is growing really well," the spokesperson said.

However, like a few other Indian consumer technology start-ups, its valuation was questioned a year later as market participants argued that competitive pressure and high-cash burn did not support its lofty valuation.

HSBC Securities and Capital Markets (India) Pvt. Ltd valued Zomato at $500 million in May 2016. Zomato and its biggest investor Info Edge (India) Ltd disputed HSBC’s estimate. Info Edge, which owns 47% of Zomato, said the company had plenty of cash “and its unit economics are really good"; Zomato said its sales had doubled over the past nine months and cash burn was down 70% from its peak.

Zomato’s sales grew 80% to $49 million in 2016-17 on growth in the advertising and food delivery business, Mint reported in April.

“As it rides the strong network effects of its restaurant discovery platform traffic leadership across 9 core markets and expands monetization across businesses, we believe Zomato can scale up ~6.5x over the next five years," Nomura said in its report.

According to its estimates, Zomato’s sales could touch $300 million over five years to the fiscal year 2022, driven by a 4.5-fold increase in its advertising business and a 15 times scale-up in the food ordering vertical. Zomato operates in 24 countries.

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