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		<img align="" alt="Deepinder Goyal" class="imgCont" height="464" src="http://bsmedia.business-standard.com/_media/bs/img/article/2015-09/15/full/1442324128-6756.jpg" style="border: 1px solid #DDD; margin-right: 10px; padding: 1px; float: left; z-index: 0;" title="Deepinder Goyal" width="620" />
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			Zomato&rsquo;s recent valuation markdown by HSBC&rsquo;s brokerage arm hasn&rsquo;t gone down well with co-founder and CEO Deepinder Goyal. In a Monday email to Zomato&rsquo;s 2,100 employees that was later posted on a company blog, Goyal rubbished HSBC&rsquo;s claim that the firm should be valued at $500 million, a 50% markdown from the $1 billion that marked it as a &lsquo;unicorn&rsquo;, the tech world&rsquo;s accepted jargon for start-ups that are valued at $1 billion or more.</div>
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			Goyal, who has built one of the few Indian Internet companies that have a global presence, challenged every claim made in the HSBC report, claiming that Zomato is the leader in 18 out of the 23 countries it counts a presence in, and has 8.5 million monthly uniques in India alone as of April, an 8% month-on-month growth.</div>
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			&ldquo;Nobody who knows our business has marked down our valuations. In fact, our existing investors are bullish about us, and are willing to back us further, if needed. But external perceptions of valuations are determined by the state of the market, and the availability of facts to the person who is analysing these numbers,&rdquo; he wrote.</div>
		<div class="box-special"><h2>Read more from our special coverage on "ZOMATO"</h2><ul class="newsHead"><li><a href="/article/companies/zomato-opens-new-vertical-for-fresh-revenue-stream-116040400033_1.html">Zomato opens new vertical for fresh revenue stream</a></li></ul></div><br>
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			The markdown by HSBC comes after Zomato underwent a restructuring late last year in order to ease pressure of not hitting sales numbers promised to its investors. Goyal himself in a letter to his employees warned them of non-performance. It also coincides with the struggles of several food-tech companies in India which have been scaling down their services, shutting operations and even looking to merge with other players.</div>
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			India&rsquo;s largest online marketplace Flipkart too has seen a slew of valuation markdowns, dropping the company&rsquo;s value from $15.2 billion to $9.5 billion. Several experts and industry watchers have however questioned the basis for these markdowns from mutual fund investors who give no reason to why they&rsquo;re doing so. While HSBC&rsquo;s analysts have justified their reasons to markdown Zomato, Goyal dissects their so-called assumptions in his blog post.</div>
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			Zomato says it is able to reduce the high costs of customer acquisition for its transaction businesses - food ordering and table reservation - as its restaurant discovery business acts as a big funnel for users. Standalone, the firm&rsquo;s food ordering arm does an average of 33,000 transactions a day and is profitable from a unit economics perspective. Overall profitability will take about 3-6 months to achieve when Zomato is able to process 40,000 orders in a single day.&nbsp;</div>
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			Moreover, Goyal writes that &ldquo;the unit economics of owning a food delivery fleet can never work out,&rdquo; a direct retort to HSBC analysts that suggested the company will continue to draw investments to grow it delivery fleet. &ldquo;These assumptions and statements in the HSBC report make it look like they&rsquo;re coming from someone who doesn&rsquo;t &ndash; and hasn&rsquo;t bothered to &ndash; understand the space well.&rdquo;</div>
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			One of the more unique challenges for an Indian Internet firm operating globally is the high cost of labour that comes along with it. Here however Zomato says that it already has large sales teams present in all its overseas markets and doesn&rsquo;t need to hire more people for the next 12-14 months. With the HSBC report questioning the viability of ad-based sales models in the US, the firm points out that the stock value of its US competitor Yelp has gone up 75 per cent in the past week.</div>
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			Answering one of the biggest questions that several experts, industry peers and not just HSBC has posed, Goyal said that Zomato has doubled its revenue over the past nine months and has reduced its cash burn by 70% from its peak. A high cash burn rate was seen as the firm&rsquo;s Achilles heel that led to everyone questioning the company&rsquo;s business model last year.</div>
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			Overall, the company says it has massive headway as it still has to monetise 95 per cent of all restaurants in its core markets and will look at mobile (which powers 50 per cent of all its traffic) more seriously. This the company hopes will allow it to turn profitable in the coming 6-12 months at an overall company level, but Goyal adds that &ldquo;we will re-invest those profits in our business to grow further, and faster.&rdquo;</div>
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In a blog post, the Zomato founder said the report is an outlier and has contradictory data on market share, defends profitability

Zomato's Deepinder Goyal disputes HSBC 50% valuation markdown

In a blog post, the Zomato founder said the report is an outlier and has contradictory data on market share, defends profitability

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