Independent analysis by broker Collins Stewart values etailer Ocado at just 128p per share – 46% below the mid-point it has outlined in its IPO prospectus.

The broker has put Ocado through Quest, its cashflow return on capital model, and found that “we forecast healthy growth in returns and a positive cash flow return on capital spread by 2014, but still can’t reconcile this to the proposed 200p-275p price range”, according to analyst Greg Lawless.

Ocado wants to raise £200m in a float and is gunning for a valuation of £1.1bn.

The Quest research said Ocado must convince investors it can grow sales at 19% a year for the next 10 years and sustain returns almost twice those of Tesco to justify its mid point valuation.

Lawless said: “Investors should ask themselves – can Ocado really operate in this super-competitive market and earn returns of nearly twice those of Tesco for a sustained period of time?”

He added: “Ocado’s IPO is too hot to handle at a valuation of 200p-275p.”

Ocado started its investor roadshow on Tuesday, and sources close to the company say its meetings are going well, but most analysts not on the ticket warn the valuation is too high.