GET Stock QuotesNews18 APP
News18 English
Powered by cricketnext logo
»
1-min read

Flipkart's Stake Acquisition 'Credit Positive' for Walmart-Moody's

On May 9, Walmart Inc said it is buying a 77 per cent stake in Indian e-commerce retailer Flipkart for about USD 16 billion, but it is yet to disclose financing plans.

PTI

Updated:May 19, 2018, 9:07 AM IST
facebookTwittergoogleskypewhatsapp
Flipkart's Stake Acquisition 'Credit Positive' for Walmart-Moody's
Representative image
Loading...
Hyderabad: Walmart's acquisition of 77 percent stake in Flipkart is "credit positive" for the US retail giant, though the Indian e-commerce firm is expected to continue to make losses for the next few years, said rating agency Moody's in its Credit Outlook report issued on Monday.

On May 9, Walmart Inc said it is buying a 77 per cent stake in Indian e-commerce retailer Flipkart for about $16 billion, but it is yet to disclose financing plans.

Moody's said it expects the deal to initially weaken Walmart's credit metrics, with retained cash flow (RCF) to net debt ratio likely dropping to the low-30 per cent range from 40 per cent currently and debt to EBITDA (earnings before interest, tax, depreciation and amortisation) ratio likely to double from 1.6 times currently.

"Despite this deterioration, the acquisition is credit positive because it provides immediate scale in India's burgeoning retail e-commerce sector and we expect that a combination of increased cash flow and debt reduction will push the RCF/net debt ratio back above our 35 per cent."

"Although we expect that Flipkart will continue to generate losses for the next few years, our credit-positive view is based on India's compelling features, including its 1.2 billion residents and an economy that generates more than 7 per cent annual GDP growth," Moody's said.

India has more than 400 million millennials, a growing middle class and exploding smartphone penetration, all of which are critical as shopping continues to shift online, the rating agency said, adding "Following the announcement, we affirmed Walmart's Aa2 rating and stable outlook."

"As Flipkart is expected to generate meaningful losses for at least the next few years, this is clearly an investment for the future..," Moody's Vice President Charlie O'Shea had said.

Walmart has been embracing a more acquisitive approach to ramping up online growth, rather than attempting to do so organically, given the importance of rapidly building scale as other fast-growing online competitors such as www.amazon.com keep expanding.

In August 2016, Walmart acquired US-based Jet.com for about USD 3.3 billion, Moody's said.
Read full article
Loading...
Next Story
Next Story

Also Watch

facebookTwittergoogleskypewhatsapp
Most Active
Company Price Change %Gain
Kotak Mahindra 1,279.65 8.42
HCL Tech 961.95 -4.99
Sun Pharma 411.25 -2.12
Yes Bank 166.20 -1.34
Reliance 1,133.80 0.90
Company Price Change %Gain
Kotak Mahindra 1,282.25 8.53
Indiabulls Hsg 718.95 -1.80
Sun Pharma 411.30 -2.09
Yes Bank 166.10 -1.31
HCL Tech 961.55 -4.98
Top Gainers
Company Price Change %Gain
Kotak Mahindra 1,279.65 8.42
Bajaj Finserv 5,849.90 3.22
Adani Ports 373.45 2.61
Bajaj Auto 2,786.20 2.51
Bajaj Finance 2,486.35 2.22
Company Price Change %Gain
Kotak Mahindra 1,282.25 8.53
Adani Ports 373.75 2.71
Bajaj Auto 2,779.75 2.23
Infosys 681.05 1.92
Asian Paints 1,317.00 1.69
Top Losers
Company Price Change %Gain
HCL Tech 961.95 -4.99
GAIL 334.70 -4.10
Indiabulls Hsg 716.85 -2.25
Sun Pharma 411.25 -2.12
Coal India 236.75 -1.60
Company Price Change %Gain
Sun Pharma 411.30 -2.09
Coal India 236.80 -1.62
Yes Bank 166.10 -1.31
NTPC 137.85 -0.93
Tata Steel 507.90 -0.62

Live TV

Loading...