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Investing.com -- In a note to clients Thursday, Morgan Stanley (NYSE:MS) highlighted Flipkart, Walmart (NYSE:WMT)’s e-commerce platform in India, as a key growth driver for the company due to its significant market share and potential in India’s emerging middle class. 

While still a small part of Walmart’s earnings, Flipkart is seen as increasingly important in the company’s long-term strategy.

The bank said that since Walmart acquired an ~80% stake in Flipkart in 2018 for $16 billion, the Indian eCommerce giant has seen its revenue more than triple, reaching approximately Rs700 billion ($8.5 billion) in the fiscal year ended March 31, 2024. 

This growth has helped raise its valuation to about $36 billion as of May 2024, according to Morgan Stanley. 

"Flipkart has gathered enough critical mass to warrant attention as part of WMT’s business," the firm noted.

Morgan Stanley emphasized Flipkart’s leading role in India’s e-commerce growth, with the company capturing around 40% of the market. 

"Since its founding in 2007... Flipkart has been at the forefront of the development of India’s e-commerce industry," the analysts wrote. 

The company operates in several key sectors, including general merchandise, fashion, and online travel services, contributing to its strong market position.

Despite India’s retail market being valued at approximately $900 billion in 2024, Morgan Stanley said per capita retail spend remains low at just $600, indicating substantial growth potential. 

"India’s eCommerce penetration is also well below that of other Asian economies, suggesting good growth potential," Morgan Stanley said.

While Flipkart still represents only a mid-single-digit percentage of Walmart’s target valuation of $1 trillion, Morgan Stanley believes its growth trajectory and market position make it a key player in Walmart’s future.

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