Flipkart, the ecommerce giant, has seen a decrease in valuation by $5 billion or approximately INR 41,000 crore since January 2022, according to equity transactions conducted by its parent company, Walmart, a US-based firm. The valuation of Flipkart dropped from $40 billion in the fiscal year ending January 31, 2022, to $35 billion as of January 31, 2024, reflecting changes in Walmart’s equity structure for Flipkart.
Flipkart attributed the decline in valuation to the demerger of fintech firm PhonePe into a separate company. Sources, however, peg the current valuation of Flipkart in the range of $38-40 billion.
In the fiscal year (FY) 2022, Walmart diluted 8 percent of its equity in Flipkart, generating $3.2 billion, which underscored the e-commerce platform’s enterprise value of $40 billion.
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In FY2024, the US retail giant augmented its ownership stake by 10 percent, reaching approximately 85 percent, through a payment of $3.5 billion. This transaction indicated Flipkart’s enterprise valuation at $35 billion.
“During fiscal 2024, the company paid $3.5 billion to acquire shares from certain Flipkart noncontrolling interest holders and settle the liability to former noncontrolling interest holders of PhonePe. The company’s ownership of Flipkart increased from approximately 75 per cent as of January 31, 2023, to approximately 85 per cent as of January 31, 2024,” Walmart said.
Flipkart, however, responded to the valuation decrease reported by Walmart, characterizing it as an “appropriate adjustment” in the company’s valuation.
“This interpretation is incorrect. The PhonePe separation was completed in 2023, which saw an appropriate adjustment in Flipkart’s valuation,” a Flipkart spokesperson said.
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Flipkart sources said the enterprise valuation exercise was last done in 2021 and the total value of the firm included fintech firm PhonePe’s valuation as well.
The source said that there is no change in the organic valuation of Flipkart.
“Last valuation exercise was in 2021 when Flipkart raised funds. Since then PhonePe was hived off from Flipkart at a certain valuation (reflecting 2021 value). PhonePe’s valuation has increased subsequently because they raised funds (valuation exercise is part of the fund raise). Flipkart’s valuation remains at what it was in 2021 adjusting for PhonePe hive-off,” a company source said.
Following an $850 million fundraising round involving investors such as General Atlantic, Tiger Global, Ribbit Capital, and TVS Capital Funds, PhonePe’s valuation has surged to surpass $12 billion.
According to the Flipkart source, the GMV of the company grew significantly in the range of 25-28 per cent on a year-over-year basis in the range of $29-30 billion in 2023 as festival sales were softer in 2022.
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The growth in GMV is expected to have increased the valuation of Flipkart at present.
“In reality, if the valuation was to be done now for Flipkart, it would have gone by to the vicinity of $38-40 billion considering the growth in GMV (Gross merchandise value) and near profitability. But no such valuation exercise has happened for Flipkart since 2021,” the source said.
In FY23, Flipkart reported a net loss of INR 4,846 crore alongside a consolidated net total income of INR 56,012.8 crore. The company’s total expenses amounted to INR 60,858 crore for the fiscal year.
