Flipkart confirms valuation at $15.2 billion

Figure was arrived at after last round of fund-raising of around $700 mn by the company recently

For the first time, India’s top e-commerce company Flipkart has spoken about its valuation. The unlisted Bengaluru-based company, which is learnt to be preparing for an initial public offering (IPO), confirmed to Business Standard in an e-mail reply on Wednesday that it is valued at $15.2 billion (Rs 98,800 crore), a number not many traditional business houses can match.

This valuation was arrived at after the recent round of fund-raising of around $700 million by the company.

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NECK AND NECK

• Flipkart’s valuation of $15.2 bn arrived at during latest round of $700-mn fund raise
• Snapdeal valuation estimated at $7 bn, latest round of funding put it at $5 bn
• Flipkart GMV at $4 bn in March 2015, Snapdeal at $4 bn in August 2015
• Flipkart and Snapdeal aiming to outdo each other by March 2016: Target to cross $10-12 bn GMV

Flipkart’s closest competition, Snapdeal, also unlisted, is learnt to be valued at $6.5 billion to $7 billion, “going by market sentiments’’. A Snapdeal spokesperson declined to put a value to the company. At the latest round of $500-million fund-raising from Alibaba and Foxconn a few weeks ago, Snapdeal’s parent company Jasper Infotech was valued at $5 billion.

Valuations of e-commerce companies, multiplying rapidly, are based on gross merchandise volume (GMV) of products sold on their platforms. These online players don’t give out their revenues, but focus on GMV run rate.

On GMV, Flipkart and Snapdeal had clashed recently through media reports. Snapdeal co-founder and chief executive Kunal Bahl had said his company would outperform Flipkart by March 2016. To that, Mukesh Bansal, head of commerce platform at Flipkart, retorted saying Flipkart would sell goods worth $10 billion (Rs 65,000 crore) during FY16, and that nobody was anywhere close to that number.

In March 2015, Flipkart’s estimated GMV was $4 billion and it is aiming for $10-12 billion by March. Snapdeal, too, is believed to have had a run rate GMV of $4 billion in August and is planning to cross the Flipkart’s target for 2015-16.

There is no official data on market share, but a source said Flipkart’s market share had dipped from more than 40 per cent to a little less than that in the past two years. Snapdeal was second at around 20 per cent share and Amazon India was next at between 15 and 18 per cent in terms of value of sales.

In spite of its high GMV and valuation, Flipkart is still in the red even after eight years of starting out as an online book retailer and then turning into a marketplace player with a focus on multiple categories including electronics, mobiles, fashion and accessories.

Flipkart plans to grow its business further on the back of technology and logistics. On Tuesday, it had announced appointments of three senior technology executives from rival Amazon, Google and Microsoft — Dan Rawson as head of customer logistics and supply chain ecosystems, Ravi Byakod as director of engineering — accounting, and Anand Lakshminarayanan as the head of product management for digital goods and services. According to reports, the company is buying back its logistics arm from WS Retail, which was a subsidiary of Flipkart till recently.

The e-commerce sector is pegged at $5-6 billion currently.