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Flipkart's Valuation Dips Over Rs 41,000 Crore in Two-Year Span

Walmart's $3.5 Billion Vote of Confidence, Flipkart's Future Amid Valuation Flux

18 March 2024


Kunal Tyagi

India produced 3X more unicorns than China in 2022.png
  • Flipkart's valuation declined by $5 billion from January 2022 to January 2024, dropping to $35 billion, attributed to equity transactions by parent company Walmart.

  • Despite Walmart's valuation adjustment due to PhonePe demerger, Flipkart contests it as an "appropriate adjustment" following PhonePe's separation in 2023.

  • Internal sources indicate Flipkart's organic valuation remains stable, incorporating PhonePe's soaring valuation of over $12 billion post-separation.

In a recent revelation, it has come to light that the valuation of Flipkart, one of India's leading ecommerce platforms, has undergone a significant decline over the past couple of years. According to equity transactions conducted by its parent company Walmart, Flipkart's valuation has plummeted by a staggering $5 billion, roughly equivalent to around Rs 41,000 crore, from January 2022 to January 2024. This decline is substantial, with Flipkart's valuation dropping to $35 billion by January 31, 2024, from $40 billion in the previous financial year. The adjustment in valuation is attributed to Walmart's restructuring of equity within Flipkart, particularly concerning the demerger of its fintech arm, PhonePe, into a separate entity.

Despite the apparent decrease in valuation as per Walmart's records, Flipkart has contested this interpretation, deeming it an "appropriate adjustment" following the separation of PhonePe. The company maintains that the PhonePe separation was finalized in 2023, resulting in a valuation adjustment for Flipkart. This perspective challenges Walmart's valuation narrative, indicating a discrepancy in the perceived value of the ecommerce giant.

Walmart's actions in the fiscal year 2024 shed further light on the dynamic nature of Flipkart's valuation. The retail giant augmented its shareholding in Flipkart by 10 percent, amounting to approximately 85 percent ownership, through a substantial investment of $3.5 billion. This strategic move underscores Walmart's continued confidence in Flipkart's potential despite the apparent decline in valuation.

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While Walmart's valuation adjustments may paint a particular picture, internal sources within Flipkart offer a different narrative. According to these sources, the last valuation exercise occurred in 2021, incorporating PhonePe's valuation within Flipkart's overall worth. However, since PhonePe's separation, its valuation has soared, surpassing $12 billion following significant fund raises. Consequently, Flipkart's organic valuation remains stable, adjusting for PhonePe's hive-off and reflecting its growth trajectory.

Despite the fluctuations in valuation, Flipkart's operational performance presents a compelling case for its enduring value. The company witnessed substantial growth in Gross Merchandise Value (GMV), ranging between 25-28 percent year-over-year, reaching approximately $29-30 billion in 2023. This robust performance, coupled with near profitability, underscores Flipkart's resilience and potential for future valuation reassessment.

In conclusion, the saga of Flipkart's valuation offers a nuanced understanding of the complexities involved in assessing the worth of a dynamic ecommerce enterprise. While external assessments may suggest fluctuations, internal dynamics, operational performance, and strategic maneuvers play pivotal roles in shaping the company's true value proposition. As Flipkart navigates through these valuation fluctuations, its ability to adapt, innovate, and capitalize on emerging opportunities will ultimately define its trajectory in the fiercely competitive ecommerce landscape.

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