ADVERTISEMENT

Flipkart Needs Walmart Deal To Take On Amazon, Aswath Damodaran Says 

Flipkart can’t last against Amazon alone. It needs Walmart for a second life, says Aswath Damodaran.

Flipkart’s application is displayed in an arranged photograph. (Photographer: Brent Lewin/Bloomberg)
Flipkart’s application is displayed in an arranged photograph. (Photographer: Brent Lewin/Bloomberg)

India’s largest e-commerce player Flipkart needs Walmart to contend with Amazon’s “incredible patience and lots of capital”, said Aswath Damodaran, professor of finance at NYU Stern School of Business.

An acquisition by Walmart will give the Indian unicorn a “second life”, he told BloombergQuint in an interview. “Head to head, Flipkart has no chance to get Amazon. Over time, Amazon would have outlasted them.”

Walmart is in discussions to spend about $7 billion to become the largest investor in Flipkart which has been burning cash at a rapid rate as it seeks to keep up with the Jeff Bezos-led e-commerce giant which made an entry into India in 2012. Besides, Amazon is considering putting in a rival bid, Livemint reported.

Opinion
Flipkart-Amazon Combine May Face Close Scrutiny For Competition Aspects

The outcome of the race for Flipkart will decide who will dominate the e-commerce market the India, poised to become the world’s third largest after the U.S. and China. India’s online market is slated to reach $28 billion by 2020, according Kotak Institutional Equities.

A Walmart-led Flipkart will be valued at a premium because as expectations of a stake sale build up, Damodaran — one of the leading voices on financial valuation — said. This will also be the best route for Walmart to enter India’s market.

I will make a prediction that the premium will be larger in a more regulated space of the market because you are buying a local player which already has it figured out.
Aswath Damodaran, Professor-Finance, NYU Stern School of Business
Opinion
This Is Why Amazon Hasn’t Beaten Flipkart In India Yet