Walmart’s John Rainey: Flipkart’s Path to Profitability Will Decide IPO Timing

Mumbai: The timing of Flipkart’s initial public offering (IPO) will depend on its progress towards profitability, according to Walmart’s Chief Financial Officer, John David Rainey. Speaking at the annual Evercore ISI Consumer and Retail Conference, Rainey noted that both Flipkart and PhonePe need to demonstrate clear financial progress before going public.

IPO Timing Linked to Profitability

Rainey stated, “We want Flipkart and PhonePe to show a steady path to profitability before considering an IPO. Investors need confidence in the financial stability and profitability of a company when it goes public. Therefore, the timing of Flipkart’s IPO will largely depend on how soon it can achieve this.”

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Flipkart and PhonePe’s Potential

Walmart acquired Flipkart in 2018 and took over PhonePe as part of the deal. Since then, PhonePe has become a major player in India’s payment market, leveraging the Unified Payments Interface (UPI) introduced in 2016. This platform has transformed payments and transfers in India, significantly boosting digital adoption. Two years ago, Walmart separated PhonePe from Flipkart, recognizing its unique growth potential.

Despite Flipkart and PhonePe’s impressive progress, Rainey believes their current valuations don’t fully capture their potential. “The true value of Flipkart and PhonePe isn’t reflected in our overall valuation today. PhonePe, in particular, has been a standout in my career. It’s not just a payment processor but also offers various services like ecommerce and insurance, which engage users deeply.”

Growth Metrics and Market Size

In FY23, PhonePe achieved a 77% growth with revenue reaching ₹2,914 crore, while Flipkart’s revenue grew by 9% to ₹56,013 crore, despite a net loss of ₹4,834 crore. PhonePe processes roughly $1.5 trillion in payment volume annually, with high user retention and transaction rates compared to market averages.

Rainey highlighted the untapped potential, saying, “PhonePe is a prized asset for Walmart, and we are excited about its growth. We expect both Flipkart and PhonePe to progress towards monetization and likely IPOs in the coming years.”

A report by Bernstein Research forecasts that India’s ecommerce market could double to about $133 billion by 2025, underscoring the significant opportunity for both Flipkart and PhonePe.