In a recent equity transaction by its US-based parent company Walmart, it has been revealed that the valuation of e-commerce giant Flipkart has experienced a significant decline over the span of two years. According to adjustments made in Walmart's equity structure concerning Flipkart, the company's valuation for the fiscal year ending January 31, 2022, has decreased from $40 billion to $35 billion as of January 31, 2024. This marks a staggering $5 billion drop, equivalent to approximately Rs 41,000 crore.
What's the reason?
Flipkart's valuation decline is attributed to the restructuring involving PhonePe, a financial technology entity, being spun off as a separate company, the company has disclosed. Despite sources indicating Flipkart's valuation to be within the range of $38-40 billion presently, it has experienced a drop from the reported $40 billion due to this reorganization. In the previous fiscal year (2021-2022), Walmart had divested its 8 per cent stake in Flipkart for $3.2 billion, indicating the company's valuation at $40 billion. However, in the fiscal year 2023-2024, Walmart increased its ownership stake in Flipkart by 10 percent to 85 percent through a $3.5 billion investment, resulting in a revised enterprise value of $35 billion for Flipkart. Nevertheless, Flipkart has refuted the reported decrease in valuation by Walmart, asserting that it is the outcome of "appropriate adjustments" made in the company's valuation.
This clarification is incorrect," stated a spokesperson from Flipkart. They clarified that PhonePe was separated in 2023, which prompted a fair adjustment in Flipkart's valuation. It was noted that the industry evaluation took place in 2021, during which the fintech firm PhonePe was also included in Flipkart's total value. According to Flipkart sources, PhonePe is currently valued at $12 billion subsequent to raising $850 million from investor groups including General Atlantic, Tiger Global, Rabbit Capital, and TVS Capital Funds.
“We are pleased by Flipkart’s performance and believe in its continued growth. Our recent earnings demonstrated a record high for us in International eCommerce sales. This included Flipkart's largest-ever Big Billion Days event with 1.4 billion customer visits over the eight-day period. PhonePe is now valued separately from Flipkart and the combined value of the businesses exceeds the previously referenced Group value.