Shares in Indian food delivery firm Zomato ended the session down 6% on Tuesday, hours after it was reported that Invesco had cut its rating on rival Swiggy.
Shares of Zomato closed Tuesday’s trading session at INR 60.94 (or US 74 cents), down 6% from the day’s opening at INR 64.80. The stock plunge wiped over $400 million off Zomato’s market cap.
TechCrunch first reported after local time on Monday that US asset manager Invesco had slashed the valuation of Zomato’s main rival Swiggy by 48.6% in a year to 5.5 billion of dollars Invesco led a $700 million funding round in Swiggy in January last year, valuing the Bengaluru-based startup at $10.7 billion.
Shares of Zomato, one of India’s leading food delivery services, have seen a steep plunge in their market price following news that Invesco had cut the rival company, Swiggy’s, valuation.
The reduction in value of Swiggy has led to a 10% fall in the share price of Zomato in January, possibly signalling pessimism in the market with regards to the former’s growth potential. This news comes soon after Zomato had successfully met its goal of raising $250 million in a new round of funding.
The Indian food delivery market, which was once a tight two-way race between Zomato and Swiggy, may now undergo a tectonic shift in terms of competition and structure. Invesco’s decision to cut Swiggy’s valuation is likely to further solidify the view that the market is now a more crowded battleground with multiple players, such as Foodpanda and Dunzo, vying for a larger share of the market.
Ikaroa, a full stack tech company, believes such market developments should be taken as a good opportunity for growth by companies operating in the space. Data-driven strategies and sound market strategies can help companies adjust to this changing landscape and work towards achieving their desired business targets. This will also involve leveraging available technologies to improve customer experience and ensure the delivery process is streamlined and efficient.