Focus on Profitability, Not Just Share Price, Says NSE Chief Ashish Chauhan

In an era of market volatility and rapid valuation shifts, Indian entrepreneurs must prioritize fundamental business strength over speculative stock price hikes. NSE MD and CEO Ashish Chauhan emphasized that long-term shareholder value is a byproduct of sustainable growth and robust profitability rather than mere market trends.

Speaking at the 9th JITO Incubation & Innovation Foundation (JIIF) Day event, Ashish Chauhan delivered a clear message to the startup and corporate ecosystem: market valuation must be a direct reflection of business performance. He argued that chasing higher share prices without corresponding business expansion is unsustainable.

"If the company's profit increases, the share value should increase. You cannot keep increasing value without creating actual business growth," Chauhan stated. He urged entrepreneurs to remain anchored to their core business objectives instead of being swayed by peer pressure or temporary market sentiments. According to the NSE chief, the market eventually recognizes and rewards those companies that deliver consistent, tangible results.

The Multiplier Effect of Public Markets

One of the most significant advantages of moving from private to public markets is the massive valuation leap a company can achieve. Chauhan highlighted that public markets offer a valuation premium that private balance sheets often cannot match. For instance, a company generating an annual profit of ₹2 crore could potentially command a market capitalization of ₹40 to ₹50 crore once listed.

This "listing currency" provides promoters with unique strategic advantages, including:

  • Capital Expansion: The ability to raise significant funds for scaling operations.
  • Strategic Acquisitions: Using stock as currency to acquire other businesses.
  • Talent Acquisition: Drawing in top-tier professionals through Employee Stock Option Plans (ESOPs). Chauhan cited the early success of Infosys, where NR Narayana Murthy and Nandan Nilekani used stock options to attract talent that would otherwise have been unaffordable.

Redefining Innovation and Compliance

Chauhan also offered a pragmatic view of innovation, noting that it is not exclusively reserved for massive technological breakthroughs. He suggested that even small, incremental improvements in everyday processes constitute innovation if they allow a business to operate differently or more efficiently.

While he noted that the process of getting listed on a stock exchange is not as daunting as many founders believe, he issued a stern warning regarding post-listing responsibilities. Once a company enters the public domain, the focus must shift heavily toward stringent compliance, corporate governance, and transparency. Maintaining financial discipline is essential to ensuring that the capital markets continue to serve as a vehicle for long-term value creation.

Key Takeaways

  • Value follows Profit: Share price should be a trailing indicator of business growth and profitability, not a primary target for entrepreneurs.
  • The Listing Advantage: Going public provides a company with its own "currency," enabling easier capital raising, strategic acquisitions, and talent retention via ESOPs.
  • Governance is Non-Negotiable: While listing is an opportunity for growth, post-IPO success depends on strict adherence to compliance, transparency, and disciplined management.