E-commerce company Flipkart reported a massive slump in its valuation as it dropped by Rs 41,000 crore, or $5 billion, in two years as of January 2024, as per equity transactions carried out by its US-based parent firm Walmart. The firm's valuation dropped from $40 billion in the fiscal year ending January 31, 2022, to $35 billion as of January 31, 2024.
The decline has been attributed by the firm to the demerger of fintech firm PhonePe into a separate company under Walmart. The US-based company in FY2022 diluted 8 per cent equity in Flipkart, which reflected a valuation of $40 billion. In 2024, Walmart increased its shareholding by 10 per cent at the cost of $3.5 billion, reflecting a valuation of $35 billion.
Despite this, current estimates place Flipkart's valuation between $38-40 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.
Until the demerger of PhonePe, the company was a part of Flipkart's valuation. However, Flipkart has disputed the valuation decrease as per Walmart's reports and saw it as a "suitable adjustment" in the company's valuation 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," PTI quoted a Flipkart spokesperson.
Flipkart's organic valuation remains unchanged
Flipkart sources have estimated that the company's valuation stands at $38-40 billion. However, its organic valuation remains unchanged. PhonePe is now valued at $12 billion after raising $850 million from investors, including General Atlantic, Tiger Global, Ribbit Capital and TVS Capital Funds.
According to the Flipkart source, the company has witnessed a significant GMV growth of 25-28 per cent year-over-year in 2023 in the range of $29-30 billion, which is expected to have boosted its present valuation. The source insisted that the last valuation exercise was done in 2021 when Flipkart raised funds and its value included PhonePe's valuation as well.
The e-commerce giant posted a net loss of Rs 4,846 crore and a consolidated net total income of Rs 56,012.8 crore in FY2023, with total expenses standing at Rs 60,858 crore. Generally, a loss of valuation impacts investor confidence and the perception of the firm.
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