INDIA – Wall Street giant Morgan Stanley’s research unit has pegged Zomato’s valuation at $2.5 billion in a report released Thursday.

This is almost three times its valuation from its last funding round.

The coverage on Zomato by the international brokerage firm was done while taking stock of the startup’s publicly traded shareholder InfoEdge, which runs portals like and

The report has come out a time Zomato is in talks with Alibaba’s affiliate Ant Financial to raise around $150 million in new financing, which is expected to value the food discovery and delivery platform at a billion dollars.

The deal is in the final stages, according to people aware of the matter.

The online food delivery space has seen a resurgence after a few tough years on the back of user numbers growing rapidly and new players like UberEats and now Ola, with its Foodpanda acquisition, jumping in to get a slice of the market.

Ola has committed to invest additional $200 million in the food delivery business.

We reported earlier that Zomato and Swiggy were in discussions for a possible merger. The fight between the two players is playing out intensely as both are in the midst of raising new capital.

Swiggy is expected to close a $100 million funding round led by its existing investor South Africa’s internet and media major Naspers.

The Times Group, which publishes this paper, runs portals like Magicbricks, Timesjobs and competes with InfoEdge’s properties.

At the consolidated level, we believe Zomato will clock $1.3 billion in revenue, including the delivery fee it gets, and register 27 per cent EBITDA margins, the report said.

“Zomato will emerge as one of the most exciting startups from India in the medium to long term – and in the process, create substantial value for Info Edge shareholders.

We have lowered our consolidated earnings estimates for financial year 2019 and 2020 as we incorporate deeper losses in the near term – but believe Zomato could be a multi-billion-dollar opportunity,” the report said.

Morgan Stanley believes Zomato could be worth $ 6.7 billion in ten years.

The Morgan Stanley report pointed out that India’s food delivery and takeaway market is about $19 billion including the unorganized segment and online penetration is low at just about 5 per cent.

Globally, markets like the US, UK, and Spain have seen online penetration rates go up as high as 45 per cent- 50 per cent.

We believe India could also reach similar penetration rates over the next 10 years, for reasons such as favourable demographics.

“Currently, in terms of volumes, approximately 50 per cent of the online market is with the restaurants such as Domino’s, Pizza Hut, along with online kitchens such as FreshMenu.

The remaining 50 per cent is split between the aggregators.

Swiggy is a leading player in order volume currently but we expect Zomato to close the gap soon, especially following its acquisition of Runnr, which provides full stack logistics capability to it,” the report noted.

The Indian online food delivery market has space for two to three players, the report added.

Zomato is expected to clock 34 million food delivery orders in India in the financial year 2018 up from about 11 million in the previous year.

The share of deliveries by Zomato’s own fleet is expected to rise to 20 per cent during the same period from 7 per cent a year ago.

The report estimated a revenue of $25 million from the overall food delivery business in financial year 2018.

ET Retail