Flipkart to add 1% to Walmart’s global revenue

The acquisition of Flipkart makes Walmart the top retailer in India ahead of the Future Group, Avenue Supermart (D’Mart) and Reliance Retail.

The deal also fulfills the American major’s longterm desire to acquire a foothold in India’s fastgrowing consumer retail business. While Flipkart’s e-commerce business could perk up Walmart’s slowmoving topline, growth will come at the cost of profitability in the near to medium term.

On a consolidated basis, Flipkart will add around 1 per cent to

Walmart’s global revenues, and will deduct around 6 per cent from Walmart earnings per share during the 2018-19 financial year.

Flipkart reported revenues of around $4.6 billion during the year ending March this year against

Walmart’s latest annual revenues of

$500.3 billion. Walmart expects a negative impact to 2018-19 earnings per share of approximately $0.25-0.30, which is likely to double the following year. The company reported EPS of $4.41 during its latest trailing 12 months, or $13.3 billion in total.

W al mart plans to finance the deal through a combination of newly issued debt and cash on hand. This will force the firm to raise fresh debt of around $10 billion as the company is currently sitting on cash and equivalents worth $6.7 billion. Otherwise, the firm could cut back on its stock buyback programme and use the savings to fund part of the deal. Walmart made stock buybacks worth $8.8 billion during its last financial year ending January 2018.