Flipkart’s valuation drops by $5 billion in 2 years. Here’s why

Flipkart’s valuation has seen a decline of $5 billion, roughly Rs 41,000 crore, as of January 2024 compared to January 2022, as per equity transactions by US parent firm Walmart. The ecommerce firm’s valuation declined to $35 billion as of January 31, 2024, from $40 billion in the fiscal year ending January 31, 2022.

This decline is attributed to the demerger of fintech firm PhonePe into a separate entity. Despite this, current estimates place Flipkart’s valuation between $38-40 billion. Walmart diluted 8% equity in Flipkart for $3.2 billion in FY2022, reflecting a valuation of $40 billion.

In FY2024, Walmart increased its shareholding by 10% to approximately 85% by paying $3.5 billion, reflecting a valuation of $35 billion. Walmart, during fiscal year 2024, increased its Flipkart shareholding from roughly 75% to around 85%, having paid $3.5 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 disputes the valuation decrease as per Walmart’s report and views it as a suitable adjustment in the company’s valuation, particularly following PhonePe’s separation in 2023. 

“This interpretation is incorrect. The PhonePe separation was completed in 2023, which saw an appropriate adjustment in Flipkart’s valuation,” a Flipkart spokesperson was quoted as saying by news agency PTI.

Sources claim that Flipkart’s organic valuation remains unchanged. PhonePe is now valued at over $12 billion after raising $850 million from investors.  Flipkart is reported to have seen significant GMV growth of 25-28% year-over-year in 2023, which is expected to have boosted its present valuation.

“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.

However, no valuation exercise has been conducted for Flipkart since 2021. The company posted a net loss of Rs 4,846 crore and a consolidated net total income of Rs 56,012.8 crore in FY23, with total expenses standing at Rs 60,858 crore.

(With PTI inputs)

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