The causes behind Flipkart’s worth decline of nearly ₹41,000 crore till 2022 are as follows:

The decline in Flipkart’s value is attributed to the separation of fintech firm PhonePe into an independent entity, the report said, adding that sources suggest Flipkart’s current valuation falls between $38-40 billion.

“We are pleased by Flipkart’s performance and believe in its continued growth. Our recent earnings demonstrated a record high for us in international eCommerce sales. This included Flipkart’s largest-ever Big Billion Days event with 1.4 billion customer visits over the eight-day period. PhonePe is now valued separately from Flipkart and the combined value of the businesses exceeds the previously referenced Group value,” said Walmart spokesperson.

Walmart’s Equity Transactions Highlight Changes

Walmart diluted 8 percent of its equity in Flipkart for $3.2 billion in FY2022, valuing Flipkart at $40 billion. However, in FY2024, Walmart increased its stake by 10 percent to about 85 percent, paying $3.5 billion, indicating Flipkart’s valuation at $35 billion, as per the report.

“During fiscal 2024, the company paid $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 percent as of January 31, 2023, to approximately 85 percent as of January 31, 2024,” Walmart said.

Flipkart disputes the valuation decrease reported by Walmart, describing it as an “appropriate adjustment” following PhonePe’s separation.

“This interpretation is incorrect. The PhonePe separation was completed in 2023, which saw an appropriate adjustment in Flipkart’s valuation,”

According to Flipkart insiders, the company’s organic valuation has remained unchanged since 2021, with the valuation exercise incorporating PhonePe’s worth.

PhonePe is now valued at over $12 billion after securing $850 million from various investors such as General Atlantic, Ribbit Capital, Tiger Global and TVS Capital Funds, among others.

GMV Growth & Financial Performance

Flipkart sources note a significant year-over-year growth in Gross Merchandise Value (GMV) in 2023, potentially impacting Flipkart’s valuation positively.

They estimate growth in the range of 25-28 percent year-over-year (YoY) to $29-30 billion in 2023, due to increased festival sales compared to 2022.

“In reality, if the valuation was to be done now for Flipkart, it would have gone by to the vicinity of $38-40 billion considering the growth in GMV and near profitability. But no such valuation exercise has happened for Flipkart since 2021,” the source said.