Flipkart's valuation drops by $5 bn in two years, Walmart's equity transactions reveal

India’s E-commerce giant Flipkart has seen a significant decline in its valuation over the past two years, according to equity transactions disclosed by its parent company, Walmart.

As per the data, Flipkart's valuation dropped by approximately Rs 41,000 crore ($5 billion) from January 2022 to January 2024.

The valuation had previously dipped to $35 billion by January 31, 2024, down from $40 billion recorded in the fiscal year ending January 31, 2022, attributing this decrease to the demerger of its fintech arm, PhonePe, into a separate entity.

Walmart's equity restructuring in Flipkart revealed the company's diluted valuation, further highlighting the impact of the demerger on Flipkart's overall worth.

Despite the decline, sources estimate Flipkart's current valuation to be in the range of $38-40 billion.

The financial manoeuvring by Walmart also involved a dilution of 8 per cent equity in Flipkart in FY 2022, amounting to $3.2 billion, while simultaneously increasing its shareholding to approximately 85 per cent by investing $3.5 billion.

Responding to Walmart's assessment of its valuation, Flipkart dismissed the interpretation as an "appropriate adjustment" and clarified that the demerger of PhonePe had already been factored into its valuation in 2023.

According to a Flipkart spokesperson, the last valuation exercise was conducted in 2021, including PhonePe's valuation within Flipkart's total worth.

Highlighting the growth trajectory, sources from Flipkart emphasised that the enterprise valuation exercise in 2021 included PhonePe's valuation, which has since increased significantly.

PhonePe is now valued at over $12 billion following a substantial fund raise.

Additionally, Flipkart witnessed substantial growth in its Gross Merchandise Value (GMV), ranging between 25-28 per cent year-over-year, totalling $29-30 billion in 2023.

This growth, coupled with nearing profitability, suggests a potential increase in Flipkart's current valuation.

Despite the growth in GMV, Flipkart reported a net loss of Rs 4,846 crore and a consolidated net total income of Rs 56,012.8 crore in FY23. Total expenses for the fiscal year amounted to Rs 60,858 crore.

(With inputs from PTI)