Is Walmart chasing a mirage by acquiring Flipkart at a total valuation of nearly $21 billion? A back of the envelope calculation suggests that Flipkart would need to generate an annual net profit of around $2 billion (Rs 135 billion at the current exchange rate) for Walmart to get a 10 per cent return on its initial investment in the company.
This will require Flipkart to become a $100-billion (Rs 6,700 billion) company in terms of revenues within the next few years, given it achieves a net profit margin similar to that of Walmart’s, at 2.1 per cent. Amazon.com too has a ...
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First Published: Mon, May 14 2018. 14:17 IST
