Flipkart sees valuation dip by $5 billion over two-year period

The numbers were at $35 billion on January 31 this year, while the Bengaluru-based e-commerce was valued at $40 billion in the financial year which got over on January 31, 2022, according to the US-based retail giant’s change in Flipkart’s equity structure.

Walmart acquired a 77 per cent controlling stake in Flipkart in 2018.

Flipkart said the valuation decline was due to its demerger with the fintech arm PhonePe, which Walmart spinned into a separate entity.

However, sources say Flipkart’s current valuation is in the range of $38-40 billion.

Walmart divested 8 per cent equity in Flipkart for $3.2 billion in the 2022 fiscal year, which shows its enterprise value pegged at $40 billion.

In the 2024 fiscal, the US retail giant paid $3.5 billion to increase its shareholding in Flipkart by 10 per cent to about 85 per cent, pegging 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 per cent as of January 31, 2023, to approximately 85 per cent as of January 31, 2024,” Walmart stated.

On the contrary, Flipkart contested the valuation reduction reflected in Walmart’s report as an ”appropriate adjustment” in its 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.

As per sources close to the company, Flipkart’s last enterprise valuation exercise was done in 2021, with the overall value also comprising fintech firm PhonePe’s valuation.

There is no change in Flipkart’s organic valuation, as per the source.

”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.

PhonePe’s current valuation is over $12 billion, after it raised $850 million from a clutch of investors including General Atlantic, Tiger Global, Ribbit Capital, TVS Capital Funds etc.

Flipkart’s Gross Merchandise Value (GMV) went remarkably up in the range of 25-28 per cent on a year-on-year, based on a $29-30 billion range in 2023 since festival sales were lower in 2022.

The GMV spike has likely pushed the Flipkart valuation currently.

”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.

Flipkart has reported a net decline of Rs 4,846 crore, with a consolidated net total income of Rs 56,012.8 crore in FY23.

The overall expense of the company came to Rs 60,858 crore during the reported fiscal year.

(With PTI Inputs)