Flipkart valuation takes a hit

A Morgan Stanley mutual fund has marked down the value of its stake in India's largest e-commerce company Flipkart by around 27 per cent.

By Our Special Correspondent in Mumbai
  • Published 28.02.16
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Mumbai, Feb. 27: A Morgan Stanley mutual fund has marked down the value of its stake in India's largest e-commerce company Flipkart by around 27 per cent.

The development comes at a time when global investors have turned cautious while investing in start-ups and some experts are questioning the high valuations enjoyed by a few.

In a filing with the US Securities and Exchange Commission (SEC) on Friday, Morgan Stanley Institutional Fund Trust has pegged the value of its stake in the Bangalore-based company at $58.93 million in December 2015, lower than $80.62 million in June last year.

While the fund had acquired the stake in Flipkart in 2013, the disclosure would translate into a per share value of $103.96 per share for the company in December 2015 against $142.25 per share in June.

Flipkart has been valued at $15 billion and the 27 per cent mark down would take its valuation to around $11 billion.

Flipkart was recently in the news when it announced a major management reshuffle when Sachin Bansal stepped down as chief executive officer to don the role of executive chairman. He was replaced by co-founder Binny Bansal. Earlier, this month, there were two high profile exits when Mukesh Bansal, who led its commerce and advertising business, and Ankit Nagori, chief business officer, resigned.

Many global investors had earlier made a beeline to put their money into Indian start-ups attracted by the huge potential here. However, the consistent cash burn among these companies in their quest to increase the market share has seen investor interest waning in recent times.

In fact, Tata Sons chairman emeritus Ratan Tata, who has invested in a clutch of start-ups, recently admitted that valuations of some of these companies have become pricey.

There are experts who forecast that the current calendar year could see more consolidation. In January this year, Quikr said that it will merge CommonFloor.com with its real estate vertical QuikrHomes as part of a plan to create an industry leader in the online real estate segment.

A recent report released by brokerage firm Kotak Institutional Securities, which examined the financials of 22 of the country's top e-commerce entities, said losses rose by 293 per cent to Rs 7,884 crore for 2014-15 on a combined revenue of Rs 16,199 crore. The higher losses, it said, was because of more advertising spends as companies looked to beat their competitors.