Walmart’s CEO, Doug McMillon, recently defended the valuation of Flipkart, India’s e-commerce giant, during an earnings call in July 2020. Despite expectations for a higher valuation following Walmart’s second investment in Flipkart, McMillon expressed satisfaction with the current valuation, emphasizing the long-term value of Flipkart’s business in India.

Understanding Flipkart’s Value

McMillon stressed that Walmart is not overly concerned with Flipkart’s short-term valuation, highlighting the significant potential of Flipkart’s business in India over time. He specifically mentioned the value derived from both Flipkart and PhonePe, Walmart’s payments venture through Flipkart, in the Indian market.

Valuation Dynamics of PhonePe

While Flipkart’s valuation has seen a modest increase, PhonePe, the payments arm of Flipkart, has faced valuation challenges despite substantial growth. Originally valued at $1.5 billion in 2018, PhonePe has witnessed significant expansion and rounds of funding, with reports suggesting a potential valuation of $10 billion.

Strategic Investment in Flipkart

McMillon emphasized Walmart’s confidence in Flipkart’s performance, especially during and after the COVID-19 lockdown. Walmart’s decision to invest further in Flipkart in July aimed to ensure adequate liquidity to capitalize on the significant opportunities in the Indian market. McMillon highlighted Flipkart’s role in Walmart’s e-commerce success, citing valuable learnings from Flipkart’s operations in India.

Walmart’s E-commerce Growth

Walmart reported impressive e-commerce sales growth, nearly doubling on a year-on-year basis, signaling its increasing competitiveness in the online retail space. McMillon attributed this success to strategic alignment and the acceleration of e-commerce trends during the pandemic. He acknowledged Flipkart’s influence on Walmart’s e-commerce strategy, emphasizing the lessons learned from Flipkart’s operational model.