E-commerce marketplace Flipkart, owned by US-based retail giant Walmart, has witnessed a substantial dip in valuation, plummeting by approximately USD 5 billion or around Rs 41,000 crore as of January 2024 compared to its value in January 2022. This decline is revealed through equity transactions executed by Walmart, Flipkart’s parent company.
According to Walmart’s restructuring of equity in Flipkart, the e-commerce juggernaut’s valuation slumped to USD 35 billion as of 31 January 2024, from a robust USD 40 billion recorded in the financial year ending on 31 January 2022. This significant downturn in valuation has raised questions about Flipkart’s trajectory in the fiercely competitive e-commerce landscape.
In an official statement, Walmart stated, “We are pleased by Flipkart’s performance and believe in its continued growth. Our recent earnings demonstrated a record high for us in International eCommerce sales. This included Flipkart’s largest-ever Big Billion Days event with 1.4 billion customer visits over the eight-day period. PhonePe is now valued separately from Flipkart and the combined value of the businesses exceeds the previously referenced Group value.”
Flipkart has attributed this decline primarily to the demerger of its fintech arm, PhonePe, into a distinct entity. Despite Flipkart’s assertion, industry sources estimate the current valuation of the company to be within the USD 38-40 billion range.
Walmart’s strategic moves regarding Flipkart’s equity paint a revealing picture. In fiscal year 2022, Walmart diluted 8 per cent of its equity in Flipkart for USD 3.2 billion, reflecting the enterprise value at USD 40 billion. However, in FY2024, Walmart increased its shareholding by 10 per cent, reaching approximately 85 per cent ownership, by investing USD 3.5 billion, signalling Flipkart’s decreased enterprise valuation to USD 35 billion.
Despite the valuation slump indicated by Walmart, Flipkart insiders maintain that there has been no organic devaluation of the company. The last valuation exercise was conducted in 2021, encompassing PhonePe’s valuation within Flipkart’s total worth.
Conversely, PhonePe has emerged as a significant entity in its own right, now valued at over USD 12 billion post an USD 850 million funding round from investors like General Atlantic, Tiger Global, Ribbit Capital, and TVS Capital Funds.
Flipkart’s recent performance indicates a robust growth trajectory, with its Gross Merchandise Value (GMV) soaring between 25-28 per cent year-over-year, reaching USD 29-30 billion in 2023. However, despite nearing profitability, Flipkart reported a net loss of Rs 4,846 crore against a consolidated net total income of Rs 56,012.8 crore in FY23, with total expenses reaching Rs 60,858 crore.
While Flipkart’s valuation faces scrutiny amid fluctuating market conditions, its strategic manoeuvres and growth trajectory will likely determine its standing in the fiercely competitive e-commerce domain.
