Focus on Profitability and Growth Over Share Price, Says NSE Chief

National Stock Exchange (NSE) MD and CEO Ashish Chauhan has urged entrepreneurs to prioritize long-term business fundamentals and sustainable growth over the superficial pursuit of rising stock prices. Speaking at the 9th JITO Incubation & Innovation Foundation (JIIF) Day event, Chauhan emphasized that market valuation must remain a direct reflection of a company's actual performance.

Ashish Chauhan highlighted a critical distinction between business value and market valuation. He argued that an entrepreneur's primary objective should be to expand the core business and increase shareholder value through strong fundamentals rather than being swayed by peer pressure or volatile market trends.

According to Chauhan, a company's share value should naturally follow its profit trajectory. "If the company's profit increases, the share value should increase. You cannot keep increasing value without creating actual business growth," he stated. He noted that companies focusing on consistent results and organic growth will eventually receive the market's recognition.

The Valuation Advantage of Public Markets

One of the most significant benefits of transitioning from a private entity to a listed company is the massive uplift in valuation. Chauhan pointed out that public markets reward profitable businesses with capitalizations that private balance sheets often cannot match.

For instance, he cited a scenario where a company earning an annual profit of ₹2 crore could command a market capitalization of ₹40 to ₹50 crore once listed. This multiplier effect provides promoters with the necessary leverage to raise fresh capital, onboard strategic partners, and aggressively expand operations.

Stock as a Strategic Business Tool

Beyond mere fundraising, Chauhan explained that being a listed entity provides a company with its own "currency." A listed promoter can utilize stock as a strategic asset to acquire other businesses or to attract top-tier talent.

He referenced the early success of Infosys, noting how founders N.R. Narayana Murthy and Nandan Nilekani used Employee Stock Option Plans (ESOPs) to recruit high-quality talent that the company might not have been able to afford through traditional salaries alone. This ability to reward staff and partners through equity is a hallmark of a mature, listed organization.

Innovation and the Discipline of Listing

Chauhan also redefined innovation for the modern entrepreneur, stating that it is not limited to massive technological breakthroughs. Instead, innovation can stem from small, incremental improvements in everyday processes—essentially, doing things differently and better.

While he noted that the process of getting listed on a stock exchange is not as daunting as many perceive, he cautioned that the real challenge lies in the post-listing phase. Once public, companies must maintain rigorous discipline, focusing heavily on compliance, governance, and transparency to sustain long-term value creation.

Key Takeaways

  • Growth-Driven Valuation: Market capitalization should be a byproduct of actual business growth and profitability, not a standalone target.
  • The Listing Multiplier: Moving to public markets can exponentially increase a company's valuation, providing a powerful "currency" for acquisitions and talent retention via ESOPs.
  • Post-Listing Discipline: Success in the public market requires a steadfast commitment to governance, transparency, and continuous process innovation.