Prosus Plate: Swiggy Savors, PayU Pops, Pharmeasy Flops

Swiggy's revenue surged 24% but what's driving this growth? Is it just food delivery or something more? But not all investments are created equal. Prosus' online pharmacy bet turned sour. Can they bounce back in the healthcare market? Stay tuned!

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Prosus, the largest shareholder in Swiggy, has reported significant growth for the food and grocery delivery giant in its latest financial update. According to Prosus, Swiggy's revenue surged by 24% in the calendar year 2023, marking a strong performance in its tenth year of operations. Key metrics such as the gross order value (GOV) also showed resilience, growing by 26% year-on-year, while the user base expanded to a substantial 104 million users by December 2023.

What's the Driving Forces Behind Swiggy’s Performance?

In its annual report, Prosus attributed Swiggy's robust growth to several strategic initiatives. The core food delivery business saw double-digit growth in GOV, fueled by increased order volumes and higher average order values. Operational efficiency improved as Swiggy diversified its revenue streams with innovations like restaurant advertising and nominal platform fees. This diversification not only boosted revenue but also contributed to enhanced profitability.

Swiggy Sets the IPO Table

Swiggy has confidentially filed for an initial public offering (IPO) worth $1.25 billion with the Securities and Exchange Board of India (Sebi). Prosus, holding a significant 32.6% stake in Swiggy, is expected to be designated as Swiggy’s promoter in the public offering, underscoring its pivotal role in the company's growth trajectory.

Swiggy Swoops into Quick Commerce

Swiggy isn't just delivering food anymore; it's delivering lightning speed. The company's foray into quick commerce has been nothing short of phenomenal where unit economics continued to improve.. With larger basket sizes, a burgeoning user base, and operational optimizations, Swiggy's quick commerce segment is growing at an exponential rate. This growth story outpaces the broader e-commerce industry, fueled by an expanding geographic presence and a wider selection of products to satisfy every customer whim.

Not All Investments Bake a Perfect Cake

While Swiggy and PayU were busy clinking champagne glasses, Prosus' investment in online medical store Pharmeasy wasn't quite as rosy. Pharmeasy reported a negative IRR of -35%, leaving a bitter aftertaste. This setback serves as a reminder of the inherent challenges in the venture capital world, where even the most seasoned investors can encounter unforeseen hurdles.

PayU achieved a consolidated revenue growth of 22%, reaching $1.1 billion in FY24. The performance was bolstered by strong contributions from its payment service provider businesses in Turkey and India, as well as advancements in credit offerings.

Prosus noted a 21% internal rate of return (IRR) from its investments in PayU, reflecting the company's effective scaling and improved profitability over the year.

What Are The Challenges in Other Ventures?

While Swiggy and PayU flourished, Prosus acknowledged challenges in its investment in online medical store Pharmeasy, which reported a negative IRR of -35%. This setback impacted Prosus’ overall performance in FY24, contrasting with the positive outcomes seen in its other portfolio companies.

As Swiggy prepares for its IPO and continues to expand its footprint in the competitive food delivery and quick-commerce sectors, Prosus remains optimistic about the company's growth prospects. With a strong user base, expanding revenue streams, and strategic investments, Swiggy appears poised to sustain its upward trajectory in the evolving digital economy landscape.

By leveraging its deep expertise and substantial investments in key sectors like food delivery and digital payments, Prosus aims to continue driving growth and innovation across its portfolio, despite occasional challenges in specific markets.

This comprehensive growth strategy positions Prosus and its key portfolio companies for continued success in the dynamic and competitive global marketplace.

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