Invesco cuts rating of IPO-linked Swiggy in a second haircut – Why is the food delivery platform lagging behind?

US-based investment firm Invesco cut the rating of online grocery delivery platform Swiggy in the second mark dow.

Photo: IANS

In early October last year, Invesco had cut the valuation of its stake in Swiggy from $10.7 billion to about $8 billion, a reduction of around 33 percent.

This time, the investment firm has lowered the valuation of Swiggy in its holding to about $5.5 billion, according to the IANS report.

As of January 31, 2023, Invesco valued Swiggy’s shares at $3,305, compared to $4,759 in October 2022, according to regulatory filings with the US Security and Exchange Commission (SEC).

In January of last year, Swiggy raised $700 million in new funding led by Invesco, making the grocery delivery platform a dime as its valuation surpassed $10.7 billion.

The new valuation is a massive 49 percent lower than the $10.7 billion valuation. Swiggy’s rating drop was first reported by TechCrunch, according to the IANS report.

Swiggy’s turnover in FY22 was over Rs 6,000. It recently appointed three independent directors to its board – Mallika Srinivasan, Padma Shri laureate and Chair and Chief Executive of TAFE, Shailesh Haribhakti, Chair of Shailesh Haribhakti & Associates, and Sahil Barua, Managing Director and CEO of Delhivery.

The rating downgrade comes as Swiggy prepares to launch its initial public offering (IPO).

The food tech giant has yet to release its FY23 results. It posted a 2.2-fold growth in its Gross Merchandise Sales (GMV) to reach Rs 5,705 crore in the FY22. However, its losses doubled to Rs.3,629 crore in FY22 compared to Rs.1,617 crore in the previous fiscal year, according to the financial statements cited by IANS.

In addition, the company said its total spending rose 131 per cent to Rs.9,574.5 crore in FY22.

Last week, online grocery delivery platform Swiggy said it had paid out more than Rs 31 crore in arrears to its delivery partners in the 2022-2023 financial year.

The platform has nearly three lakh delivery partners in more than 500 cities.

In March, Swiggy sold its Cloud Kitchen business to [email protected], a leading player in the fast-growing cloud kitchen industry, as the growth rate for grocery delivery slowed. However, the amount for which the deal was sealed was not disclosed.

Why is Swiggy lagging amid Invesco valuation declines?

• Delivery of core necessities slows as 380 employees are laid off
• Instamart lags behind Zomato’s Blinkit
• Management resignations
• The growth rate for food delivery has slowed from forecasts

Zomato stock price today

After Invesco’s valuation of Swiggy collapsed, competitor Zomato’s share price has been under sell-off stress since the morning.

Zomato’s share price opened lower today, hitting an intraday low of Rs 61.50 a share, some 5.20 per cent lower than its close on Monday, which was Rs 64.90 a share on the NSE.