Flipkart's valuation declines by over $5B in two years

Ecommerce firm Flipkart's valuation has declined by $5 billion or around Rs 41,000 crore as of January 2024 compared to that in January 2022, according to equity transactions carried out by its US-based parent firm Walmart.

The valuation of the ecommerce firm declined to $35 billion as of January 31, 2024, from $40 billion in the financial year ended on January 31, 2022, as per Walmart's change in equity structure in 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.

Walmart diluted 8% equity in Flipkart for $3.2 billion in fiscal year (FY) 2022 reflecting the enterprise value of the ecommerce at $40 billion.

The US retail giant in FY24 increased its shareholding by 10% to approximately 85% by paying $3.5 billion, reflecting the enterprise valuation of Flipkart 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% as of January 31, 2023, to approximately 85% as of January 31, 2024," Walmart said.

Flipkart, however, countered the decrease in valuation shown as per Walmart's report and termed it 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.

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.

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"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 fundraise). Flipkart's valuation remains at what it was in 2021 adjusting for PhonePe hive-off," a company source said.

PhonePe is now valued at over $12 billion after an $850 million fundraise from a group of investors including General Atlantic, Tiger Global, Ribbit Capital, TVS Capital Funds etc.

According to the Flipkart source, the GMV of the company grew significantly in the range of 25-28% on a year-over-year basis in the range of $29-30 billion in 2023 as festival sales were softer in 2022.

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 USD 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.

Flipkart posted a net loss of Rs 4,846 crore and consolidated net total income of Rs 56,012.8 crore in FY23. Total expenses of the company were Rs 60,858 crore during the reported fiscal year.