While common-folk like us make purchases off Flipkart, the big daddy of global retail has announced its purchase of Flipkart.

Walmart has finally announced its decision to buy 77% stake in Flipkart for a whopping $16 billion.

While the nuances, contours, permutations and combinations of the biggest FDI transaction in India are being discussed, I can’t help but marvel at the gargantuan size of this shopping basket.

Sixteen billion dollars, pause for a breath, sixteen billion dollars for 77% means all of Flipkart is worth $20.8 Billion.

$20.8 Billion in the Indian currency is Rs 1,35,000 crore. If they ever thought of writing a cheque for this deal, the accounts person would think twice before putting the customary “only”, at the end of this amount!

If Flipkart was to list at current valuations, it would be the 19th largest company by market capitalisation in India.

As value-seeking Indians, we have a habit of comparing prices across websites, so I put myself in Walmart’s place and imagined what they could’ve bought instead of Flipkart, if FDI in multi-brand offline retail was allowed.

Turns out, Walmart could’ve bought all the DMART, Big Bazaar, FBB, Brand Factory, Westside & Zara stores, and still have enough change to add all Shoppers Stop Stores to the cart.

So the Final Question Then

- Has Walmart paid more for Flipkart than what it’s worth?

Not quite, if we compare it with the popular EV/Sales metric for retail companies.

However, one needs to bear in mind, Flipkart is loss making at an operational level while the others are alive and kicking, EBITDA downwards.

So the big question for Indian retail industry now is – will Flipkart’s pursuit of revenue hurt others’ profits, or will others’ focus on profitable growth outlast this investment fueled chase for scale.

Either way, us consumers have all the reasons in the world to rejoice!

Read our comprehensive coverage of the deal here.

First Published:May 10, 2018 1:31 PM IST