NSE chief urges startups, MSMEs to use listing as a tool for scale

National Stock Exchange Managing Director and CEO Ashish Chauhan on Friday urged startups and micro, small and medium enterprises to consider public listing as a strategic tool to raise capital, improve governance and scale their businesses.

Speaking at the JITO Incubation and Innovation Foundation’s Foundation Day event at the NSE, Chauhan said founders should focus on building profitable and sustainable companies instead of being distracted by short-term movements in share prices.

“Your business is in your operations, not in the share price. The stock market is only a reflection of your business, it is not the business itself,” Chauhan said.

He said public markets allow promoters to raise growth capital without giving up control of their companies. A promoter can initially offer 25 percent equity to the market and retain 75 percent, with the option to dilute further as the business grows, he said.

“When you list, you keep 75 percent with yourself and offer 25 percent to the market in the beginning. You can give more later. Control stays with you,” Chauhan said.

He said listing can improve a company’s credibility, bring analyst coverage, ease access to bank finance and help attract talent through stock options. A listed company can also use its shares as a currency to acquire other businesses or bring in partners, he added.

Chauhan said profitable businesses can command stronger valuations in public markets. A company earning an annual profit of Rs 2 crore, he said, could potentially have a market capitalisation of Rs 40-50 crore after listing.

His comments come days after the NSE filed its draft prospectus for its long-awaited initial public offering.

Addressing concerns around hostile takeovers, Chauhan said promoters retain control and no change in ownership can happen against their wishes.

On liquidity in the SME segment, Chauhan said generating trading volume was not the company’s responsibility. He pointed to the market maker mechanism, under which two-way quotes are provided for three years.

Companies on NSE’s SME platform, launched in 2012, have collectively raised more than Rs 21,700 crore and have a combined market capitalisation of over Rs 2 lakh crore, Chauhan said.

He acknowledged that SME business models carry higher risk than larger mainboard companies, but said investors in the segment understand the risk-reward trade-off.

“If you are doing a business of Rs 10 crore or Rs 20 crore, you should be planning for Rs 200 crore and beyond,” he said.

JIIF chairman Jeenendra Bhandari said the foundation has completed four incubation cohorts over the past two years and facilitated more than Rs 60 crore in startup investments.

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