Following yet another markdown by investors, e-retailer Flipkart’s valuation has dropped to a shade below $9 billion, much lower than the peak valuation of $15 billion in June 2015, when the e-commerce player raised $700 million in a round of funding led by Tiger Global.
Regulatory filings show Fidelity has marked down the valuation of the e-commerce player by 3.2% to $81.55 per share for the quarter ended August from $84.29 in the previous three month period. Valic has assigned Flipkart a value of $95.84 per share down from $108.04 in the previous quarter, revealing a markdown of 11.3%. In the quarter ended May, Valic had upped Flipkart’s valuation by 10% and Fidelity by 3%.
In May, Morgan Stanley Institutional Fund lowered the value of its holdings in the e-retailer by nearly16% pegging the firm’s valuation at $9.3 billion; it priced the shares at $87.86 apiece.
The downgrade comes at a time when the e-commerce space in the country is in consolidation mode. Promoters are taking a hard look at their models, attempting to rein in costs as losses mount and investors tighten their purse strings. Although some 30-35 million customers are shopping online today, revenues are not growing fast enough to keep pace with costs.
Several ventures are either scaling back or trying to identify new sources of revenue and some, especially in the food tech space, have shut operations. “We believe this shake-up may intensify further, leading to the emergence of one or two strong companies within each sub-sector,” analysts at Kotak Institutional Equities wrote in a recent report. They believe the hyper-valuations seen in successive rounds of funding in 2014-15 is correcting. Nevertheless, business houses like that of the Tatas have recently rolled out their e-commerce portals.
Key investors in Flipkart include Tiger Global, Naspers, GIC, DST Global and Accel. Flipkart has cumulatively raised around $3.2 billion the last infusion of $700 million coming in June 2015. Meanwhile, competitor, Amazon has announced a fresh investment of $3 billion for the Indian market.