Walmart's Flipkart devaluation, attributing to PhonePe split, marks ₹41,000 crore loss.

by Jaswinder Kaur / 18-03-2024 / comments

E-commerce titan Flipkart has encountered a significant drop in valuation, witnessing a decline of $5 billion or roughly ₹41,000 crore since January 2022, according to PTI, citing transactions by its parent company Walmart based in the United States.

As of January 31, 2024, Flipkart's valuation has settled at $35 billion, a downturn from $40 billion in the fiscal year 2022, reflecting adjustments in Walmart's equity structure. The devaluation is linked to the separation of fintech entity PhonePe into an independent firm, with sources suggesting Flipkart's current valuation falls within the range of $38-40 billion.

In fiscal year 2022, Walmart diluted 8 percent of its equity in Flipkart for $3.2 billion, valuing Flipkart at $40 billion. However, in fiscal year 2024, Walmart boosted its stake by 10 percent to approximately 85 percent, paying $3.5 billion, signaling Flipkart's valuation at $35 billion.

Walmart's statement revealed the acquisition of shares from certain Flipkart noncontrolling interest holders and the settlement of liabilities to former noncontrolling interest holders of PhonePe, leading to the increase in its ownership of Flipkart.

Flipkart refuted Walmart's reported devaluation, asserting it as an "appropriate adjustment" following PhonePe's separation, completed in 2023. Flipkart insiders maintain that the company's organic valuation has remained steady since 2021, with the valuation process factoring in PhonePe's value.

PhonePe's valuation has soared to over $12 billion following investments from various entities. Flipkart sources highlight a substantial year-over-year growth in Gross Merchandise Value (GMV) in 2023, potentially positively impacting Flipkart's valuation. They estimate a growth range of 25-28 percent year-over-year to $29-30 billion in 2023, attributed to increased festival sales compared to 2022.

Despite Flipkart's growth, it reported a net loss of ₹4,846 crore in fiscal year 2023, with total expenses surpassing its consolidated net income of ₹56,012.8 crore.