Swiggy’s Valuation Reduced by Invesco from $8.2 Billion to $5.5 Billion
- ByStartupStory | May 8, 2023
Invesco, a Swiggy investor, has reduced the food-delivery firm’s valuation from $8.2 billion to $5.5 billion, according to regulatory filings. Invesco valued Swiggy’s shares at $3,305 as of January 31, 2023, down from $4,759 in October last year, when it first cut the company’s share value due to a general correction in the global tech market. Invesco stated that it relies on other market players to assess its portfolio.
According to regulatory filings, Invesco, the Swiggy investor, has stated that “Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used.” The asset manager further explained that “Unobservable inputs reflect Invesco Advisers, Inc.’s assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.” This highlights the importance of using the best available information to determine the fair value of investments when observable inputs are not available.
Zomato, Swiggy’s main competitor, has witnessed a significant decline in its stock price since its public debut in the tech boom of 2021, with a 48% drop almost two years after listing. As of Monday, Zomato’s shares closed at Rs 64.89 per share on the BSE. This is the second time that Invesco has lowered Swiggy’s valuation, with a 23% reduction in April, as reported by one of the sources. The current scenario highlights the challenges faced by companies in the food delivery industry.
Invesco’s valuation of Swiggy’s shares in October 2022 was lower than that of July last year when it was valued at $6,212 per share, resulting in a company valuation of $8.2 billion. Swiggy had revalued its worth after Zomato’s successful listing, where it raised $700 million in January last year, leading to a valuation of $10.7 billion for the Bengaluru-based firm. The current decline in Swiggy’s valuation underlines the volatile nature of the food delivery industry.
Swiggy’s decreasing valuation coincides with the company facing new challenges in the food delivery industry. The company has laid off 380 employees this year due to the slowing down of its core food-delivery business, despite being backed by SoftBank. In contrast, Zomato’s relaunched loyalty program, Zomato Gold, has helped it regain market share lost to Swiggy in the latter half of 2022, according to HSBC Global Research.
Additionally, Swiggy’s Instamart unit is lagging behind Blinkit, Zomato’s grocery delivery business, in terms of gross merchandise value (GMV), as reported by Jefferies. In the first half of 2022, Instamart recorded a GMV of $257 million, while Blinkit recorded a GMV of $270 million. Moreover, Swiggy has also shut down its gourmet grocery service Handpicked, which was reported on May 3.
Swiggy’s Instamart head Karthik Gurumurthy would be stepping down by the end of April. Co-founder Phani Kishan Addepalli is expected to succeed him. In addition, the company’s CTO Dale Vaz has left his position and has been replaced by Madhusudan Rao, a senior vice president.
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