Robust GMV growth, operational efficiencies bolster Flipkart’s future prospects

Buoyed by its robust GMV growth and operational efficiencies, prominent e-commerce firm Flipkart remains optimistic about its future growth prospects

In January 2024, Flipkart experienced $5 billion of Rs 41,000 crore decline in valuation compared to its value in January 2022. This valuation shift was indicated by equity transactions conducted by its parent company, Walmart, based in the United States. Flipkart's valuation decreased from $40 billion in the fiscal year ending January 31, 2022, to $35 billion by January 31, 2024, following changes in Walmart's equity structure related to Flipkart.

Walmart had initially diluted 8 per cent of its equity in Flipkart for $3.2 billion during fiscal year 2022, establishing the enterprise value of Flipkart at $40 billion. However, by fiscal year 2024, Walmart increased its shareholding by 10 per cent to approximately 85 per cent, paying $3.5 billion, which reflected the revised enterprise valuation of Flipkart at $35 billion. This increase in ownership was attributed to Walmart's acquisition of shares from certain Flipkart non-controlling interest holders and the settlement of liabilities related to former non-controlling interest holders of PhonePe.

Flipkart attributed this decline in valuation primarily to the demerger of PhonePe, its fintech subsidiary, into a separate entity. However, sources suggested that Flipkart's current valuation might range between $38-40 billion, contradicting Walmart's reported figures.

Responding to these discrepancies, Flipkart clarified that the separation of PhonePe had been completed in 2023, with corresponding adjustments made to Flipkart's valuation. The company insisted that there had been no organic change in Flipkart's valuation since the last valuation exercise conducted in 2021, which included PhonePe's valuation as part of Flipkart's overall worth.

Furthermore, Flipkart sources emphasised on the significant growth in Gross Merchandise Value (GMV), which rose by 25-28 per cent Y-o-Y to reach $29-30 billion in 2023. This growth, coupled with near-profitability, was expected to positively impact Flipkart's valuation, potentially pushing it back to the $38-40 billion range.

Despite these assertions, Flipkart reported a net loss of Rs 4,846 crore and a consolidated net total income of Rs 56,012.8 crore in FY23, with total expenses amounting to Rs 60,858 crore. Nevertheless, the company remained optimistic about its future prospects,