The valuation trajectory of Flipkart, India’s prominent e-commerce entity, has experienced a significant downturn, with reports indicating a decline of USD 5 billion or approximately Rs 41,000 crore as of January 2024 in comparison to January 2022. This revelation stems from equity transactions conducted by Flipkart’s parent company, Walmart, based in the United States.
According to Walmart’s disclosures, Flipkart’s valuation dwindled to USD 35 billion by January 31, 2024, marking a notable decrease from the USD 40 billion valuation recorded in the fiscal year ending January 31, 2022. The primary driver behind this decline, as cited by Walmart, is the demerger of PhonePe, Flipkart’s fintech arm, into an independent entity. Consequently, Walmart clarified that during the fiscal year 2024, it disbursed USD 3.5 billion to acquire shares from specific Flipkart non-controlling interest holders and to settle liabilities owed to former non-controlling interest holders of PhonePe. This strategic move propelled Walmart’s ownership stake in Flipkart from approximately 75 percent as of January 31, 2023, to around 85 percent by January 31, 2024.
However, Flipkart contested the valuation decrease as portrayed in Walmart’s report, deeming it an “appropriate adjustment” rather than an indication of inherent value erosion. The company clarified that the separation of PhonePe was finalized in 2023, leading to a corresponding adjustment in Flipkart’s valuation.
Addressing the valuation nuances, sources estimated Flipkart’s current valuation to hover between USD 38-40 billion, underscoring the dynamic nature of financial assessments within the e-commerce landscape. Walmart’s equity maneuvers further elucidate its strategic positioning, including an 8 percent equity dilution in Flipkart for USD 3.2 billion during fiscal year 2022, juxtaposed with a subsequent increase in shareholding to approximately 85 percent through a USD 3.5 billion investment.
Furthermore, Flipkart emphasized that its organic valuation remains consistent, with the last valuation exercise conducted in 2021 encompassing PhonePe’s valuation within Flipkart’s overall worth. Despite PhonePe’s subsequent valuation surge, propelled by an USD 850 million fund raise, Flipkart asserts its valuation status quo, underscored by sustained Gross Merchandise Value (GMV) growth and near-profitability projections. Notably, Flipkart’s GMV witnessed robust year-over-year growth in the range of 25-28 percent, reaching USD 29-30 billion in 2023, bolstered by resilient festival sales.
However, amidst discussions surrounding Flipkart‘s valuation dynamics, it’s essential to acknowledge the company’s financial performance. Flipkart reported a net loss of Rs 4,846 crore and consolidated net total income of Rs 56,012.8 crore in FY23, with total expenses amounting to Rs 60,858 crore.
In conclusion, while Flipkart’s valuation trajectory reflects nuanced shifts influenced by corporate strategies and market dynamics, the company remains poised for continued growth, buoyed by resilient operational performance and strategic alignments.
