Narayana Murthy's Catamaran Ventures warns of steep discounts in Indian startup valuations

Infosys co-founder and billionaire NR Narayana Murthy's family office, known as Catamaran Ventures, on August 26, cautioned on the valuation of startups in India, pointing to steep discounts driven by funds that need to exit their investments, according to a Bloomberg report.

In an interview with the publication, Deepak Padaki, president of Catamaran Ventures LLP, said that middling startups struggling with growth that don’t have a clear path to profitability or aren’t making much progress are being sold at discounts of 30-40 per cent.

Caution ahead? Funds looking to exit as term ends

Padaki noted that funds that have been invested in such startups want to sell their investments as they reach the end of their term, adding, “There may be opportunities for private equity or secondary funds but we do not have the bandwidth to take on companies that need extensive hand-holding for a turnaround.”

Notably, Catamaran is among India's largest private investors, handling Narayana Murthy's $1.3 billion portfolio.

The report noted that India's startup space remains among the world's largest, but valuations of multiple companies “have nosedived” as several companies struggled to grow and as investors ask tougher questions.

Valuations not attractive, fail to jump

The report noted that Oyo Hotels, backed by the SoftBank Group, was worth $10 billion in 2019, but stiff competition hurt its earnings and valuation, adding that its listing has been delayed “several times”.

Further, the report also noted that venture capital and growth deals in India surged during the COVID-19 pandemic, peaking at $38.5 billion in 2021, according to data from Bain & Co. In 2024, this was at $13.7 billion.

Urging caution: Shift in investments to manufacturing

Catamaran is urging caution — having invested in only two companies since the start of 2024, arguing that valuations for high growth and profitable startups are too high. At the same time, Catamaran says deals for minority stakes without much control are no longer attractive.

The report noted that the family office is shifting gears to invest in manufacturing, while the majority of its portfolio is in public markets and a handful of tech startups. Its holdings include SpaceX and the National Stock Exchange of India Ltd.

Lately, the family office has also begun to focus on companies within specific supply chains such as aerospace, electric vehicles (EVs), electronics and perhaps medical devices in the future, as India tries to boost local manufacturing and become an export hub. The firm is scouting for small and medium enterprises that have one or two factories but want to scale.

“While AI’s influence within the manufacturing sector may not be felt for some time, India has a short window to take advantage of the manufacturing interest, especially since it has a cost edge that may disappear as automation becomes the norm. As a family office with the potential to deploy more patient capital, manufacturing fits aptly with what we want to do,” Padaki said.

(With inputs from Bloomberg)