You are currently viewing Understanding the Rs 41,000 Crore Drop in Flipkart’s Market Value

Understanding the Rs 41,000 Crore Drop in Flipkart’s Market Value

Flipkart’s market value has experienced a notable adjustment, declining by approximately $5 billion, from $40 billion to $35 billion, over the span from January 2022 to January 2024, according to equity dealings by its parent company, Walmart, based in the US.

This downturn in valuation can be attributed to the strategic uncoupling of the fintech firm PhonePe from Flipkart, now thriving as an autonomous entity. Nevertheless, current valuations still place Flipkart in the ballpark of $38-40 billion. In a move to refine its shareholding structure, Walmart divested an 8% stake in Flipkart for $3.2 billion, pegging the valuation at $40 billion during the 2022 fiscal year.

By fiscal year 2024, Walmart made a significant reinvestment, boosting its stake in Flipkart by 10%, which translated to an 85% ownership, through an infusion of $3.5 billion. This maneuver underscores Walmart’s commitment to cementing its footprint in India’s booming e-commerce sector.

Flipkart has voiced disagreement with the perceived devaluation, pointing to the spin-off of PhonePe in 2023 as a justified recalibration of its market value. “This interpretation is incorrect. The separation of PhonePe in 2023 led to a proper adjustment in valuation,” a Flipkart representative remarked, countering the narrative of a valuation drop.

Despite these financial oscillations, industry insiders maintain that Flipkart’s core value remains robust. Following its split from Flipkart, PhonePe’s worth surged past $12 billion, buoyed by a hefty $850 million investment round.

Additionally, Flipkart celebrated a significant uptick in its Gross Merchandise Value (GMV) in 2023, recording growth rates between 25-28%, which likely contributed positively to its valuation prospects.

It’s important to note, however, that Flipkart hasn’t undergone a formal valuation review since 2021. In the 2023 fiscal year, the company disclosed a net loss of Rs 4,846 crore against a consolidated net income of Rs 56,012.8 crore, with overall expenditures reaching Rs 60,858 crore.