August 19, 2020
In July this year, Walmart made its second investment in Flipkart after it bought almost 80% stakes in the Indian e-commerce giant for $16 billion two years ago.
Some would have anticipated that Flipkart, which was not only Walmart’s strong bet in e-commerce but also bought out Walmart India recently, would see a much higher jump in valuation than the 19% hike.
On Tuesday, Walmart CEO Doug McMillon defended Flipkart and said that they were really ‘pleased.’
“We’re not getting hung-up on the valuation in the short-term. Over time, I think everybody will understand just how valuable business in India is, whether it’s the Flipkart portion or the PhonePe portion,” he defended.
It’s important to know that PhonePe – Walmart’s payments bet through Flipkart, has perceived an appraisal crisis. While it was valued at $1.5 billion in 2018 after Walmart’s venture in Flipkart, for the past two years, the company has been full-fledged with numerous rounds of backing from Flipkart itself. While Morgan Stanley had valued the payments firm at $7 billion, reports stated that PhonePe has been looking at a $10 billion valuation.
For the time being, McMillon said that having been enthusiastic about Flipkart’s performance during and after COVID-19 lockdown, Walmart desired to make sure they had enough cash to function, and that’s why the venture came through in July. “This is a time when there’s so much of an opportunity that the size of the price in India is significant. We want to make sure that we’re on our front foot being aggressive,” he said.
Walmart’s big e-commerce jump is also thanks to Flipkart
On Tuesday, Walmart surprised market analysts after its profits jumped 8.5% to $6.1 billion, while the revenue grew by 5.6% to $137.7 billion. One more astonishing number was the US retail giant claiming that its e-commerce sales had nearly folded on a year-on-year basis. This comes after Walmart has been trying to convince the e-commerce sector for years now.
McMillon enlightened that the success in e-commerce sales arises as many things were affiliated even before the coronavirus pandemic, and the lockdown only enhanced the same. He added that their attainment of Flipkart and watching how it takes off in the Indian market has also facilitated Walmart. “We’re learning a lot from Flipkart and how they operate,” he said during the call.
Walmart CEO also said that regardless of the coronavirus pandemic, Flipkart has seen its sales surpassing pre-COVID levels.