Why Did Baron Capital Cut Down 10 Percent Of Swiggy’s Valuation?
The food-tech giant Swiggy reported losses in FY 22 even after doubling its revenue. In the financial year 2022, the food delivery company posted a loss of 3,629 crores, more than the loss reported in the previous year, i.e. 1,617 crores. Due to the poor performances of Indian startups, the shareholders are offloading their stakes from the companies. According to recent news, the US-based asset management firm Baron Capital Group cut down the food delivery giant Swiggy’s valuation by 10 per cent. However, this is not the first time the US-based Baron Capital has slashed food tech platform Swiggy’s fair value. On December 31, 2022, it cut down Swiggy’s fair value by 34 per cent. As of March 31, 2023, Swiggy’s effective valuation is $6.5 billion. In this blog, we will walk you through the reasons why Baron Capital Group cut down 10% of Swiggy’s valuation and its impact on Swiggy stocks.
An Overview Of Swiggy
Incorporated in 2014, Swiggy is a popular online food ordering and delivery application powering small eateries, massive restaurants, and food chains to serve the needful customers. It is established in Bangalore and spreads its services across 100 locations in India. The platform prepares the food on the customers’ demand and delivers it right to the customer’s doorstep. Due to the ease, comfort, and speed, Swiggy became popular, and its services were highly in demand. As the need for the app surged, the Swiggy share price also increased.
The application features some of the top restaurants in the area, and based on the location, it shares the list with the user. As per the choice, the customer can order the food by filtering the results based on ratings, delivery time, price, and cuisine. Furthermore, the application’s user interface is simple, and aesthetic, and has all the necessary features to enhance the customer’s experience. Despite being a food delivery platform, Swiggy maintains complete transparency among the users, restaurants, and delivery guys; users can instantly track their orders and know how long it will take to get delivered. Moreover, customers can contact the delivery boy and restaurants to customise their delivery and order.
Financial Journey
In January 2015, the food delivery application raised $1.25 million in the initial funding rounds from investors, including SAIF Partners and Accel India. After receiving the funding, Swiggy started expanding its services in other cities of India, including Mumbai, Hyderabad, Delhi, Pune, and Chennai. Swiggy raised $2 million in a series A funding from the same previous firms, Accel and SAIF, in May 2015. Further, in June 2016, it raised $15 million in series B funding from multiple investors, including the previous ones and Bessemer Venture Partners. In May 2017, Swiggy acquired SuprDaily, its potential competitor in the grocery and daily essential item segment, with a vision to expand its services.
Swiggy raised $80 million in a series C funding round from several partners, including Naspers and Harmony partners, in September 2017 and continued to expand its services in different genres. In 2018, Swiggy introduced Swiggy Go which delivers groceries and daily essentials. In the series D funding round, the food and grocery company raised over $100 million; in series E, it raised more than $113 million. Currently, Swiggy provides food and grocery delivery services in more than 500 cities in India, has partnerships with more than 200,000 restaurants, and plans to establish itself in the online grocery delivery segment to meet the customer’s needs.
Why Baron Capital Cut Down 10 % Of Swiggy’s Valuation?
After cutting Swiggy’s fair value by 34 per cent on December 31, 2022, the US-based asset management firm Baron Capital Group further cut down Swiggy’s fair value by 10 per cent. The potential reasons why the company offloaded its stakes may be due to the diminishing profits of the food delivery app. Since January 2022, Swiggy hasn’t received any funding, due to which the company’s valuation has been in hot water since then, which can be another reason for offloading the stake. The overall shrinking valuation of the Indian food tech startup can be one of the primary reasons why all the companies are offloading their stakes. However, Swiggy officials refused to comment on this topic.
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Due to the COVID-19 pandemic, Swiggy could not perform well in food and grocery delivery. However, as per recent reports, the demand for the application is continuously surging so is Swiggy share price NSE. You can benefit from this opportunity by investing in Swiggy unlisted shares and earning high returns on investment. To buy unlisted shares of top-performing companies, you can count on India’s leading stock broking platform Stockify. It provides all the necessary details like EBITDA, market valuation, equity per ratio, and more. Connect with our experts now!
