The Case for Long-Term Value Over Market Volatility
NSE MD and CEO Ashish Chauhan issued a blunt warning to entrepreneurs on Friday: stop obsessing over daily share price fluctuations. Speaking at the 9th JITO Incubation & Innovation Foundation (JIIF) Day, Chauhan argued that sustainable market valuation must be anchored in actual business performance and fundamental growth, rather than the whims of the market.
The Arithmetic of Going Public
Chauhan urged founders to ignore peer pressure and fleeting market trends. He offered a concrete reality check: a company earning an annual profit of Rs 2 crore could command a market capitalisation of Rs 40 to 50 crore once listed. This valuation, he noted, grants promoters the leverage necessary to raise capital, secure strategic partners, and scale operations effectively.
Stock as a Tool for Talent and Growth
For Chauhan, a public listing serves as more than just a capital injection; it provides a “currency” for expansion. By utilizing stock, promoters gain the power to acquire other businesses, draw in partners and reward staff through stock options. He pointed to the trajectory of Infosys, where NR Narayana Murthy and Nandan Nilekani leveraged stock options to hire talent the company could not otherwise have hired.
Reframing Innovation in the Daily Grind
Innovation, Chauhan argued, is not limited to major technological breakthroughs. Instead, he defined it as any process that improves everyday operations. “Whatever you do, if you do it differently and in a better way, that is also innovation,” he stated. He acknowledged the gritty reality of the entrepreneurial path, noting that many founders endure years of struggle before achieving success.
The Rigorous Demands of Public Accountability
The transition to the public market is often perceived as more daunting than it is, but Chauhan warned that the shift requires a fundamental change in corporate culture. Once a company lists, it must commit to non-negotiable standards:
- Compliance: Ensuring all regulatory requirements are met.
- Governance: Maintaining strong oversight and ethical management.
- Transparency: Providing clear and consistent reporting to shareholders.
Strategic Pillars for Sustainable Success
Chauhan distilled his advice for the next generation of business leaders into four core principles:
- Performance First: Market valuation is a reflection of business growth, not an end in itself.
- Strategic Currency: Publicly traded shares allow for acquisitions and talent acquisition via stock options.
- Innovation is Practical: Small, meaningful improvements to daily processes constitute valid innovation.
- Post-Listing Discipline: Transparency and governance are non-negotiable for long-term survival in public markets.
While the journey of building a business is inherently challenging, Chauhan maintained that a relentless focus on core fundamentals remains the most effective strategy for lasting success.
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