New Delhi: Flipkart's latest round of fund of $160 million announced on Wednesday effectively pegs its valuation almost at par with the aggregate market capitalisation of the 10 biggest listed retail firms.
While the deal announcement puts Flipkart's valuation at over $1.5 billion or around Rs 9,300 crore, the combined market cap of the top 10 listed retailers — including Trent, Shoppers Stop, Future Retail, Future Lifestyle, Pantaloon, Kewal Kiran and others — was marginally higher at Rs 11,973 crore as on Thursday.
The e-commerce major that went live only in 2007, after the latest round of funding, also stands neck-and-neck in terms of market valuation against established companies such as Godrej Industries, P&G India, Videocon Industries and Piramal Enterprises.
Market experts say that while Flipkart may be in the same business as other brick-and-mortar retailers, it may not be directly comparable to them as the business models are vastly different. "E-commerce companies have an advantage when it comes to scalability as a brick-and-mortar retailer has a huge cost involved when it comes to scaling up the business, but that is not the same with these new-age companies," said Gaurav Dua of Sharekhan. "However, if you compare the enterprise value of companies in the same line from both models, there will not be such a huge gap in the valuation."
Dua said that a direct comparison would be other online platforms, including JustDial or MakeMyTrip. He said that Flipkart is also getting a premium because of the fact that it is the market leader and has an advantage of scale over others in the same line.
On Wednesday, Flipkart raised $160 million from private equity investors, taking the total fund infusion to $360 million in its recent fund raising drive. The Bangalore-based company had raised $200 million in July from existing investors, including South Africa's media and e-commerce company Naspers Ltd and private equity funds Tiger Global and Accel Partners.
Flipkart is not alone. The new lot of e-commerce firms seem to be catching the fancy of investors, especially PE and VC majors. JustDial, which came with its initial public offering in May last year, has witnessed a sharp surge in the value of share post listing in June. While the shares were allotted at a price of Rs 530 in the IPO, they are currently trading at a premium of 71 per cent at Rs 909.8. The company's current valuation is Rs 6,373 crore.
Market Cap*
Trent 3,060
Shoppers Stop 2,867
Future Retail 1,623
Future Lifestyle 1,600
Kewal Kiran Clothing 1,036
Pantaloon 1,021
V-Mart 359
Prozone Capital 359
Provogue 92
Brandhouse Retail 10
Flipkart** $1.5 billion
*Market cap in Rs crore as on October 10, 2013 **Valuation based on its latest fund raising at around Rs 9,300 crore ($1.5 billion)
