In 2nd markdown in 4 months, Invesco cuts Swiggy’s valuation to $5.5 billion

Swiggy is also the second decacorn that has seen its valuation halve. Earlier this year, Blackrock cut edtech giant, Byju’s valuation to around $11.5 billion, from a high of $22 billion when the edtech sector was booming during the Covid years.

Invesco, a US-based fund manager, has once again slashed the valuation of Swiggy, the food and grocery delivery platform, effectively pulling its valuation below the market capitalization of its biggest rival Zomato.

As per filings, Invesco – which led Swiggy’s $700 million round in January last year – valued the Bengaluru-based company at $5.5 billion as of January 31, 2023, as per the latest filing.

The fresh valuation is about 31.2 percent lower from the $8 billion that Invesco said Swiggy was worth in March this year. When Invesco infused $700 million in Swiggy in January last year, it valued the food-tech giant at $10.7 billion at a time when the food delivery market was riding on a high.

In total, Swiggy’s valuation has been lowered by 48.6 percent from January last year, putting it behind its listed peer, Zomato, which had a market capitalization of around $6.9 billion on May 8.

However, it is important to note that these updates are from January, when even Zomato’s shares were trading much lower than their current levels, implying there could be an improvement in Swiggy’s valuation in the months to come.

TechCrunch was the first to report about the development.

Invesco’s move to mark down Swiggy’s valuation internally comes at a time when many investors are re-evaluating the valuations of technology companies across the globe.

Swiggy is also the second decacorn that has seen its valuation halve. Earlier this year, Blackrock cut edtech giant, Byju’s valuation to around $11.5 billion, from a high of $22 billion when the edtech sector was booming during the Covid years. Further, in September 2022, SoftBank reportedly marked down Oyo’s valuation from $10 billion to $2.7 billion.

The cut in valuations comes at a time when funding into Indian startups has dropped by over 20 percent YoY. To weather the downturn, even large companies like Swiggy have laid off employees to fast-track their profitability goals and become more efficient.

Swiggy let go of 380 employees in January this year as the co-founder and CEO, Sriharsha Majety said the food delivery market was slowing and even Swiggy's peers have been affected.

Gurugram-based Zomato, Swiggy's main competitor in the space too flagged similar concerns on its earnings call recently. Zomato has however seen its market share improve in recent times.

“In 2022, Zomato has gained 13 (percentage points) in terms of market share from Swiggy since FY20,” HSBC’s analysts noted in March. By the end of Q4FY23, Zomato’s market share had reached 56 percent, while Swiggy enjoyed the rest 44 percent, thanks to the reintroduction of Gold, Zomato’s loyalty program.

That was expected to change by the end of the current fiscal, when Zomato’s market share would likely increase to 57 percent, while Swiggy’s would reduce to 43 percent, HSBC’s analysts predicted.