Amazon India valued at $16 bn: Citi Research

A week after US-based retail chain Walmart acquired 77% of Flipkart, a report by Citi Research last week found that rival Amazon India’s business could be valued at $16 billion, The Economic Times stated, citing the research study.

The firm’s gross merchandise volume (GMV) is also expected to touch $70 billion and its net sales will be $11 billion by 2027, ET reported.

Walmart’s buyout of Flipkart valued the firm at approximately $20.8 billion.

Retail in India is pegged at $44 billion, making the country one of the valuable emerging markets for the segment, the report ET said citing Citi Research.

Prior to the Walmart-Flipkart deal, Amazon too had evinced interest in the homegrown company, offering to buy 60% stake.

“We believe the India e-commerce market will grow at a 21% CAGR over the next 10 years to $202 billion, that Amazon could capture 35% of this market and that the company could generate more than $10 billion in revenue and nearly $1.5 billion in FCF (free cash flow) by 2027,” ET quoted Citi’s senior analyst Mark May and Hao Yan as saying.

Amazon has committed $5 billion to India and has deployed most of this amount, but this massive investment continues to drag its margins. For the first quarter of the calendar year 2018, the firm’s international business has been clocking losses of 30% to $622 million. It had reported a loss of $481 million in the first quarter of 2017.

“We will continue to invest in India where we are seeing great progress with both sellers and also customers. And we like the momentum we have seen there. The Prime programme started in the first year in India grew faster than any Prime programme we have seen in other countries,” Brian Olsavsky, Amazon’s chief financial officer, told investors during an earnings call. 

After its acquisition of Flipkart, Walmart is expected to drive the firm’s expansion into the grocery segment. Although, Amazon has already invested significantly on this front followed closely by Alibaba. 

In an interview with TechCircle in February this year, Amazon India head Amit Agarwal said that the company is not looking at profitability but is focussed on growth. He claimed that Amazon India is growing at a double-digit growth rate. Going forward, the company is looking to strengthen its Prime offering, particularly videos as well as its smart assistant Alexa and its Amazon Business marketplace.

In February, it launched its flagship music streaming service in the country.

Just ahead of the Walmart-Flipkart deal, Amazon pumped around $400 million into its Indian arm earlier this month. This brought Amazon's total investment in Amazon Seller Services Pvt. India, its local unit, to more than Rs 20,000 crore.