Valuation markdowns for Zomato-rival Swiggy continue, with Baron Capital becoming the latest investor to slash the value of its holding in the food and grocery delivery company.

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The US-based investor has cut the value of its stake in Swiggy by 40 percent to about $45 million as against the investment value of $76 million, as per the investment firm's quarterly report for Q1 2023.

Baron Capital entered the cap table as a new investor in Swiggy's previous fundraise of $700 million in Series K at a valuation of $10.7 billion in January 2022. Now, the markdown implies a drop in Swiggy's overall valuation to $6.4 billion.

In its report for Q4 2022, Baron had reduced Swiggy's valuation by 34 percent as against the investment value, seeing the overall valuation at about $7 billion.

Also Read: This analyst says Zomato, Swiggy and other food delivery platforms may have to offer more discounts

As per data accessed by CNBC-TV18, Baron Capital has kept Swiggy's valuation below its investment value for at least the last four out of five quarters since picking up a stake in January, 2022.

Baron Capital is the second investor to have exercised a valuation markdown in Swiggy in less than 10 days. Last week, Invesco cut Swiggy’s valuation to $5.5 billion from $8.2 billion, as per Q4 2022 regulatory filings in the US.

It was Invesco's second valuation mark down for Swiggy in less than a year. Earlier in April, the fund had reduced the investee company's valuation to $8.2 billion from $10.7 billion.

Interestingly, Invesco had also participated in Swiggy’s mega-$700 million funding round, turning the company into a decacorn last January.

Invesco has implied that it observes other "market participants" in determining fair value of its holdings in a portfolio startup. Zomato, which is Swiggy's key competitor, has seen its market capitalisation slip by nearly 50 percent since listing in mid-2021.

The Deepinder Goyal-led company's current market capitalisation stands at about $6.8 billion. However, in January, when Invesco cut Swiggy's valuation, Zomato's marketcap was much lower and hovered between $5.5 billion and $6 billion.

Swiggy is not only one to have seen a trimming of valuation. A series of India's most-valued startups have suffered valuation mark downs at the hands of investors since last year. The valuation drawdowns have become common as investors are now reviewing their investments in a tighter liquidity environment.

While we see these valuation draw downs, what we have to keep in mind is: not all of the company's investors have cut the valuations. Mostly, the US-based ones have cut the valuation of the shares they hold in some of India's unicorns. At regular intervals, they have to tell their investors how much the firm would make if it were to sell its holding in a company in the current market condition. In several cases, the market value of a listed peer becomes a good parameter.

With the interest rates in the US at the highest since the 2008 economic crisis, and as investors run Discounted Cash Flow (DCF) models, shares look more expensive, leading to the market course correcting, an investor told CNBC-TV18.

Also Read: Invesco cuts Swiggy's valuation — Here's a list of markdowns for other unicorns

Here's a list of markdowns for some of India's most valued startups:

First Published:May 16, 2023 4:29 PM IST