The initial public offerings (IPOs) for Flipkart and PhonePe, two of India’s prominent digital businesses, could be on the horizon within a couple of years, according to a Walmart executive.
Timeline for IPOs
Dan Bartlett, Walmart’s executive vice president for corporate affairs, shared insights at Walmart’s shareholder meeting near its Bentonville, Arkansas, headquarters. Bartlett mentioned that the IPOs are being considered within the next few years. Interestingly, Walmart might prioritize PhonePe’s IPO over Flipkart’s, despite Flipkart being the more established entity.
PhonePe’s Market Position
Bartlett emphasized that PhonePe is “one of the largest payment platforms” in India, benefiting significantly from its integration with the country’s Unified Payments Interface (UPI). This platform allows users to transfer money across multiple banks seamlessly, without disclosing account details. Given its market position, there is substantial groundwork required before PhonePe can go public. The decision on whether to list on the Indian exchange or others remains under consideration.
In May, PhonePe and Google Pay dominated the UPI ecosystem, collectively accounting for over 85% of total transactions. According to the National Payments Corporation of India (NPCI), PhonePe alone handled 48.6% of total UPI transactions, with 683.19 crore transactions valued at INR 10.33 lakh crore.
Financial Performance
PhonePe, which re-domiciled to India from Singapore in 2022, was valued at nearly $10 billion at the time of its move. The company reportedly spent over $900 million to register its parent entity in India. Despite this, PhonePe’s net loss crossed INR 2,500 crore for the financial year ending March 31, 2023, with consolidated net losses rising 39% to INR 2,795.3 crore from the previous fiscal year, primarily due to increased ESOP expenses. However, its operating revenue surged by 77% to INR 2,913.7 crore from INR 1,646.2 crore in FY22.
Flipkart’s Financial Health
Flipkart Internet Private Limited, the B2C arm of Walmart-owned Flipkart, has shown impressive financial performance. For the financial year ending March 31, 2023, Flipkart’s operating revenue approached INR 15,000 crore, increasing by 42% to INR 14,845.8 crore from INR 10,477.4 crore in FY22. Additionally, Flipkart managed to reduce its cash burn, resulting in a 9% reduction in net loss to INR 4,026.5 crore from INR 4,419.5 crore in FY22.
Redomiciling and Future Prospects
Earlier reports indicated that Flipkart initiated discussions to re-domicile its parent entity to India from Singapore, following PhonePe’s move. The re-domiciling process, while costly, positions these companies better for the Indian market and potentially for their respective IPOs.
Overall, the path to IPOs for Flipkart and PhonePe appears to be aligned with broader market readiness and internal financial health. The move to go public will likely depend on continued revenue growth, reduced losses, and the successful navigation of market conditions.
As these companies prepare for their IPOs, their performance and strategic decisions will be closely watched by investors and industry analysts alike.
