International markets have been a major growth driver for the world’s largest retailer Wal-Mart (NYSE:WMT) especially since 2008 when the global economy slumped. Strong comparable sales growth and a record number of new units have contributed to impressive growth rates in this segment. The retailer’s international segment witnessed a significant growth of 15.2% y-o-y in net sales for fiscal 2012. According to our estimates, the international segment presently contributes approximately 40% to Wal-Mart’s stock price.
Wal-Mart is undertaking several initiatives to increase its footprint globally. Last year, it acquired Massmart Holdings to build its presence in Africa. It has a joint venture with Bharti Enterprises to operate in India, the world’s third largest economy. According to recent reports, the joint venture is in talks with several banks to raise about $96 million, which it intends to use for large-scale expansion in India. The joint venture presently operates 17 stores across the country. 
At present, foreign retailers such as Wal-Mart and Carrefour are not allowed to sell directly to consumers in India. The foreign retailers are also required to invest at least $100 million, half of which has to be spent on developing back-end infrastructure.
We believe Wal-Mart’s efforts to build its presence in India could be a key contributor to its future growth, especially since the Indian retail market is expected to witness impressive growth in the coming years. According to Business Monitor International, the Indian retail market is expected to double to $785 billion by 2015 from $396 billion this year. 
- Wal-Mart, Bharti JV In Talks With Banks To Raise INR5 Bln, The Wal Street Journal [↩]
- Pantaloon Climbs in Mumbai as India Approves Overseas Stakes in Retailers, Bloomberg [↩]