Walmart Stock (WMT) Wobbles Despite Winning Indian Lending Green Light

Shares in retail giant Walmart (WMT) fell today as its Indian e-commerce arm Flipkart secured a lending license from the nation’s banking regulator.

Lucrative Model

The green light from the Reserve Bank of India and the regulator for the non-bank finance company license (NBFC), means that Flipkart can offer loans directly to its customers and sellers on its platform.

This is the first time that the bank has granted such a license to a large e-commerce player in India. Flipkart however will not be allowed to take deposits from its customers.

Most e-commerce platforms currently offer loans in tie-ups with banks and NBFCs, but a lending license will enable Flipkart – India’s largest e-commerce firm – to lend directly. This can be a more lucrative model for the group.

Flipkart, in which Walmart holds a more than 80% stake, applied for the license in 2022, according to a Reuters report.

Lending Decision

It is understood that Flipkart may start lending “in a few months.” A final decision on that is expected to be made following the appointment of key personnel.

Flipkart plans to lend directly to its customers on its platform and through its fintech app super.money. It may also offer financing to sellers on the platform.

Earlier this year, Flipkart’s rival Amazon (AMZN) bought a Bengaluru-based non-bank lender Axio, but the deal is yet to be cleared by the central bank.

India is a growth market for Walmart. Last week it said that Flipkart is on a path to profitability with quick commerce – delivery within 15 minutes – accounting for 20% of the e-commerce market.

However, it has faced some criticism inside the country over e-commerce laws.

Is WMT a Good Stock to Buy Now?

On TipRanks, WMT has a Strong Buy consensus based on 28 Buy and 2 Hold ratings. Its highest price target is $120. WMT stock’s consensus price target is $109.71 implying a 9.73% upside.

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