“We want to continue to move on this path to profitability with each of these entities (Flipkart and PhonePe). I think for investors, you want to be able to know when you do an IPO, where the economics are going and that you are getting to a point of profitability. And so, I think the timing of that will really influence the timing of the IPO,” Rainey said during the annual Evercore ISI Consumer and Retail Conference when asked on the timing of the Flipkart IPO and its goal.
Walmart had taken over PhonePe as part of its 2018 acquisition of ecommerce firm Flipkart. UPI, introduced in 2016, has been a game-changer in the payments ecosystem in India, easing payments and transfers, and playing a key role in digital adoption in the country. And Walmart’s fintech firm, which controls half the payment market in India, was hived off from Flipkart nearly two years ago. The retailer said financial services, in terms of percentage growth, has the greatest opportunity over the next five years but relative to the size of its overall retail business, it might be harder to see that in the results.
“The value of those is not properly reflected in our overall valuation today. I could not be more excited about the PhonePe business. In fact, in my 25-year career, there have been few companies that I have found to be so strong, so compelling in terms of what they’re doing and their capabilities. I can say some of the same things about Flipkart. And so that’s the monetisation opportunity that we think gets the value more properly reflected,” he added.Walmart said it is doing roughly $1.5 trillion of payment volume through PhonePe and its retention and transactions per active user are high compared to the overall market. In FY23, PhonePe posted a 77% growth at ₹2,914 crore while Flipkart’s revenue grew 9% to ₹56,013 crore on a net loss of ₹4,834 crore. Walmart has been weighing on Flipkart’s IPO for more than two years now but have not put a time frame on their monetisation yet.”The other aspect about what makes PhonePe so compelling is they are not just processing payments. They are actually providing services to customers that give them ecommerce shopping opportunities, give them the opportunity to buy insurance and many other verticals. And given the engagement of their user base, they are seeing really great traction in this. And so, PhonePe is just a real coveted asset that we are glad to have as part of our portfolio. And over the next couple of years, both Flipkart and PhonePe, you will hear more about as they move towards probably a monetisation of that with an IPO,” said Rainey.
A report by Bernstein Research said India’s ecommerce market could double in size to about $133 billion by 2025.