NSE Chief Urges Startups to Treat Public Listing as Strategic Tool for Unlocking Business Scale

NSE Chief Urges Startups to Treat Public Listing as Strategic Tool for Unlocking Business Scale​

National Stock Exchange (NSE) Managing Director and CEO Ashish Chauhan issued a strong advisory to founders of startups and micro, small and medium enterprises (MSMEs). He urged these companies to view public listing not merely as a capital event but as a critical strategic tool for scaling operations, enhancing governance, and securing growth capital.

Speaking at the JITO Incubation and Innovation Foundation’s Foundation Day event, Chauhan emphasized that company operations and profitability must remain the primary focus. He stated, "Your business is in your operations, not in the share price." The stock market, he clarified, is simply a reflection of the underlying business strength.

Retaining Control While Securing Growth Capital​

Chauhan addressed common founder anxieties regarding public markets and control. He assured entrepreneurs that listing provides a mechanism to raise necessary growth capital without immediately surrendering significant ownership or management authority.

He explained that during an initial offering, a promoter can retain 75 percent equity while offering 25 percent to the market. This structure ensures continued promoter control, with flexibility built in to dilute further as the business evolves and expands. Addressing concerns over hostile takeovers, he confirmed that promoters maintain control and no fundamental changes to ownership can occur against their wishes.

Catalyzing Valuation Through Credibility and Exposure​

The NSE chief detailed several ways a public listing significantly elevates a company’s market standing and opportunities. Becoming a listed entity improves a company’s credibility and facilitates immediate access to analyst coverage.

Furthermore, Chauhan pointed out that listings are instrumental in attracting top talent through stock options and easing the path to institutional bank finance. A listed company can strategically use its shares as a currency in acquisitions or when seeking strategic partnerships with other businesses.

Market Potential: Profitability Dictates Valuation Multiples​

Chauhan provided a clear indication of the relationship between operational performance and market valuation. He suggested that profitable businesses are uniquely positioned to command stronger valuations within public exchanges.

He gave an example, noting that a company generating an annual profit of Rs 2 crore could realistically achieve a market capitalization ranging from Rs 40 crore to Rs 50 crore following its listing. This underscores the premium associated with proven operational excellence in capital markets.

SME Segment: A Platform for Exponential Growth​

Addressing the MSME sector, Chauhan provided data on the performance and potential of the NSE’s dedicated platform. Companies utilizing the SME segment have collectively raised more than Rs 21,700 crore since the platform’s launch in 2012. The combined market capitalization of these entities exceeds Rs 2 lakh crore.

While acknowledging that SME business models involve higher inherent risks compared to larger mainboard companies, he emphasized the understanding of this risk-reward trade-off by investors. He advised entrepreneurs: "If you are doing a business of Rs 10 crore or Rs 20 crore, you should be planning for Rs 200 crore and beyond."

In related developments, the NSE recently filed its draft prospectus for one of its anticipated initial public offerings. This advisory comes as JIIF Chairman Jeenendra Bhandari noted that his foundation has completed four incubation cohorts and facilitated more than Rs 60 crore in startup investments.