Flipkart valuation declines over ₹41,000 crore in two years: Major reasons why

Flipkart's valuation has declined by $5 billion or around ₹41,000 crore as of January 2024 compared to January 2022, as per equity transactions carried out by its US-based parent firm Walmart. The valuation declined to USD 35 billion as of January 31, 2024 from USD 40 billion in the financial year ended on January 31, 2022. Walmart attributed the decline to the demerger of fintech firm PhonePe into a separate company and said, “During fiscal 2024, the company paid USD 3.5 billion to acquire shares from certain Flipkart noncontrolling interest holders and settle the liability to former noncontrolling interest holders of PhonePe. The company's ownership of Flipkart increased from approximately 75 per cent as of January 31, 2023, to approximately 85 per cent as of January 31, 2024.”

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This means that Flipkart's current valuation could be in the range of USD 38-40 billion. Additionally, Walmart diluted 8 per cent equity in Flipkart for USD 3.2 billion in fiscal year (FY) 2022 and increased its shareholding by 10 per cent to approximately 85 per cent by paying USD 3.5 billion.

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Flipkart countered the decrease in valuation shown as per Walmart's report and termed it an "appropriate adjustment", saying as per news agency PTI, “This interpretation is incorrect. The PhonePe separation was completed in 2023, which saw an appropriate adjustment in Flipkart's valuation.”

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"Last valuation exercise was in 2021 when Flipkart raised funds. Since then PhonePe was hived off from Flipkart at a certain valuation (reflecting 2021 value). PhonePe's valuation has increased subsequently because they raised funds (valuation exercise is part of the fund raise). Flipkart's valuation remains at what it was in 2021 adjusting for PhonePe hive-off," a company source told PTI.

"In reality, if the valuation was to be done now for Flipkart, it would have gone by to the vicinity of USD 38-40 billion considering the growth in GMV (Gross merchandise value) and near profitability. But no such valuation exercise has happened for Flipkart since 2021," the source added.