PhonePe’s $7B Valuation Drives Walmart Shares To All-Time High

The payment arm of Flipkart, PhonePe, has been valued at $7 billion by Morgan Stanley, according to reports.

The news is good for Walmart, which owns a majority portion of Flipkart. Walmart shares hit an all-time high of $118 on Thursday (Sept. 5).

PhonePe was valued at $1 billion during its last funding round, so the jump in value has been significant. In a bull case, the company could be worth as much as $20 billion.

The payments space in India is expected to grow more than 20 percent over the next four years. PhonePe could end up being the biggest value-maker for Walmart, which bought a 77 percent stake in Flipkart for $16 billion in 2018. Walmart has been actively trying to capture the eCommerce market in India, which many see as the world’s last growth area for the industry.

Morgan Stanley said that PhonePe could get revenues of around $1.4 billion from dealing in financial services alone. Currently, PhonePe is operating in mutual funds but aims to continue growing its wealth management portfolio.

PhonePe was started in 2015 by Sameer Nigam, Rahul Chari and Burzin Engineer, who used to be executives at Flipkart, a company that actually acquired PhonePe in the first year.

Flipkart reportedly plans to spin off the company, and is looking for a $1 billion investment based on a $10 billion valuation. That would still put it below rival Paytm, which has a valuation of $10 billion.

PhonePe said it had 343 million merchant UPI transactions in August, which would make it the market leader in that category. The company said it deployed QR code through 6.5 million Indian merchants in 210 cities.

The space is fairly crowded, with Google Pay and Amazon Pay both trying to capture a portion of the market. Also, WhatsApp has plans to enter the space, with 400 million users currently in the country.