High valuation of $8 billion makes Zomato's offer less appetising

Competitive intensity, customer acquisition costs likely to delay profitability

The valuations of the country’s first consumer platform, Zomato, to hit the primary market may not yield outsized gains for investors. The leader in the online food aggregator market is raising Rs 9,350 crore to fund its growth plans. 

The company, which has a presence in 525 cities across the country with an average of 6.8 million customers ordering food every month, is being valued at $8 billion, or just under Rs 60,000 crore at the upper end of the price band of Rs 72-76. Most brokerages had initially pegged valuations at $5.5 billion. 

Says Karan Taurani, vice-president, Elara Capital: “At 11