The Times of India Saturday edition, might have made the eyes popped of few emerging tech giants who were eager to list their company on the stock market and dreaming to rule like Infosys and Tatas of the world. Accompanied by a headline in e edition that Oyo and delhivery face heat due to the fate of Paytm and Zomato. This has been a long debated topic over the last 2 or 3 years that how the valuation game and the recent embedded value of a behemoth like LIC are being deemed to be listed on the stock exchanges. The stock market giant and as many call the Real Scam hero, Rakesh Jhunjhunwala has repeatedly voiced out his opinions on the same, I would like to focus the attention of the readers when in an interview about 2 months back he said Doodh ka Doodh, Pani ka Pani, company name it's for the readers to guess.
Few highlighted points that SEBI wants the new emerging unicorn hubs and tech giants to adhere or will be under the scrutiny are as follows:
Current offer documents are required to disclose traditional data like EPS, Price to earnings, and net asset value of the company
Comparisons with co peers are also supposed to be provided
But SEBI said these typically describe profit making companies and not loss making ones like new age tech cos
As a result, the markets regular has proposed that such companies explain valuations based on transactions like issuance or acquisition of shares in the past 18 months
Companies will have to disclose key performance indicators for 3 years prior to the proposed IPO.
Many would assume that the above has come into effect with the heat the Paytm and Zomato which are trading below their listed prices and are hurting the sensex Street and customers at large but it also is a significant move taking into account that when you are not a profit making company why are you running on the market sentiments that the next big bull will be right….
Would be happy to receive any comments and same will be implemented too.
Happy reading.
Ritvik.
Dalal Street finally takes the due course
My sincere appreciation Ritwik for this initiative of yours. Loved reading your inputs. Honestly i am against this valuation based model. However , if few select are willing to put bet on such IPO - nothing wrong in it.
Rightly said dear, but there are so many drivers in the market, its really tough for SEBI also to make some rules on which shares can be valued or traded. But its a always advisable to invest in Blue chip companies or in the companies having solid track record, performance indicators, good dividend & bonus history and valuation plus future prospects. In nut shell one should track and read about the companies, before investing there hard earned money.