Focus on business fundamentals, not stock valuations: NSE Chief

Mumbai, June 26 (IANS) National Stock Exchange (NSE) MD and CEO Ashish Kumar Chauhan on Friday urged entrepreneurs to focus on building profitable and sustainable businesses rather than getting distracted by short-term stock price movements, saying that strong business fundamentals ultimately drive long-term market value.

Calling capital markets a key enabler of India’s entrepreneurial growth story, Chauhan encouraged startups and MSMEs to view public listing as a strategic tool for scaling their businesses.

Speaking at the JITO Incubation and Innovation Foundation’s (JIIF) Foundation Day event at the NSE, he said founders should concentrate on business operations and profitability rather than day-to-day movements in share prices.

“Your business is in your operations, not in the share price. The stock market is only a reflection of your business, it is not the business itself,” Chauhan said.

He said public markets provide growth capital, improve governance standards, enhance credibility and help companies attract talent while allowing promoters to retain control of their businesses.

“Public listing lets founders raise growth capital without surrendering control, noting that a promoter can offer 25 per cent of equity to the market at the outset, retain 75 per cent and dilute further only as the business requires,” he stated.

He further said that listing improves governance standards, increases credibility, attracts analyst coverage and eases access to bank financing.

The process also facilitates orderly succession planning by making it easier to divide assets among heirs.

“When you list, you keep 75 per cent with yourself and offer 25 per cent to the market in the beginning. You can give more later. Control stays with you,” he said.

He said, “the public markets reward profitable businesses with a valuation that private balance sheets cannot match. A company earning an annual profit of Rs 2 crore, he said, could command a market capitalisation of Rs 40 to 50 crore once listed, giving the promoter room to raise capital, bring in partners and expand operations.”

–IANS

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