Flipkart’s valuation could attract offline retailers

Once touted as India’s Amazon, Flipkart has definitely gone ahead to create its own identity.

The country’s largest e-commerce company, after it raised $1 billion in the latest round, is being valued at ₹30,000-36,000 crore by e-commerce experts and analysts.

Overtaking others With this kind of valuation, the company has even overtaken the country’s leading and organised retailers such as Reliance Retail and Future Group, they say.

Compared to Flipkart, India’s largest organised retailer Future Group is valued at ₹6,000-7,000 crore and Tata Group's Trent is at ₹1,600 crore while Shoppers Stop, another leading retailer could be around ₹2,000 crore.

The Bangalore-based company has so far raised over ₹15,000 crore in several tranches, including the latest round, since its inception in 2007. It has crossed 1 billion in gross merchandise value but analysts peg its actual sales at $500-600 million a year.

Ashish Jhalani, founder of eTailing India, said that Flipkart’s valuation at ₹36,000 crore infers that India’s growth is more in the e-commerce sector rather than the organised retail. “We are not surprised at this number (valuation). With this funding, it has not only become the largest player in retail but has easily grabbed the fourth position in the Asia Pacific region after Alibaba and Rakuten,” he said, adding that the global investors have realised that it has the potential to become a global player. “We can actually now see lot of action among the offline players going the online way,” Jhalani added.

Flipkart’s founders Sachin Bansal and Binny Bansal declined to comment on the valuation but said that this was a milestone achievement for the company. They, however, did not give out any targets for short to medium term but added that, “We are looking at building a large Internet company out of India and we’re also positive that in a few years several $100-billion companies will emerge out of this country.

“Internet will improve the quality of life for millions of Indians, and e-commerce is going to play a huge role in this change. The focus at Flipkart is to continue to make shopping online simpler and more accessible through the use of technology.”

“By 2020, India will have more than half a billion mobile Internet users. Our intense focus on mobile and technology puts us in a unique position to take advantage of this massive opportunity,” the Bansals said.

More funds needed Arvind Singhal, Chairman, Technopak, was of the view that the way Flipkart was scaling up, it would soon require more funds.

“We would not be surprised if they raise another round in another 12-18 months or go for an IPO.” However, the Bansals have clearly stated that the company is not focusing on profitability or IPO any time soon.

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