Overview of Flipkart’s Valuation Decline
In the span of two years, leading Indian e-commerce giant Flipkart has seen a notable decline in its valuation, according to recent equity transactions by its parent company, Walmart. From a high of USD 40 billion in the financial year ending January 2022, the valuation dipped to USD 35 billion by January 2024. This $5 billion drop, equivalent to around ₹41,000 crore, has sparked discussions and analyses within the business community.
Major Factors Influencing the Decline
A significant factor behind this decline is attributed to the demerger of the fintech entity PhonePe, which became a separate company. Walmart’s financial manoeuvres during fiscal 2024, which included a USD 3.5 billion investment to acquire shares from certain noncontrolling interest holders of Flipkart and to settle liabilities with former holders of PhonePe, played a crucial role. Despite these transactions, Walmart increased its ownership stake in Flipkart from roughly 75% to 85%, hinting at a complex interplay of equity adjustments and strategic realignments within the conglomerate’s portfolio.
Flipkart’s Counter and Valuation Realities
Flipkart has countered the perceived valuation decrease, suggesting that the adjustment was a necessary outcome of the PhonePe separation, completed in 2023. The company insists that the last formal valuation in 2021, which occurred before the PhonePe demerger, should serve as the baseline, adjusting for the separation. Despite not undergoing a formal valuation since 2021, insider sources believe that, considering Flipkart’s growth in Gross Merchandise Value (GMV) and strides towards profitability, its valuation could realistically rebound to the USD 38-40 billion range. This optimistic view, however, remains speculative in the absence of a recent valuation exercise.
