Companies to focus on business growth rather than just share price: NSE chief

Companies should focus on building sustainable businesses, improving profitability and creating long-term value rather than merely chasing higher share prices, NSE MD and CEO Ashish Chauhan said on Friday.

Addressing the 9th JITO Incubation & Innovation Foundation (JIIF) Day event, he said a company’s market valuation should be a 
reflection of its business performance and growth.

The objective of an entrepreneur should be to expand the business and increase shareholder value through stronger fundamentals, he suggested. “If the company’s profit increases, the share value should increase. You cannot keep increasing value without creating actual business growth,” Chauhan said.

He said entrepreneurs need to remain focused on their core business rather than getting influenced by market trends or peer pressure. Companies that consistently grow and deliver results eventually get recognised by the market, he added. 

The public markets reward profitable businesses with a valuation that private balance sheets cannot match. A company earning an annual profit of `2 crore, he said, could command a market capitalisation of `40 to `50 crore once listed, giving the promoter room to raise capital, bring in partners and expand operations. Listing also gives a company its own currency, Chauhan said.