National Stock Exchange (NSE) Managing Director (MD) and Chief Executive Officer (CEO) Ashish Kumar Chauhan on Friday told investors and entrepreneurs that they should focus on building profitable and sustainable businesses instead of focusing on daily fluctuations in share prices. He said that in the long run, the real value of a company in the market is determined by its strong business performance.

Ashish Chauhan said that the capital market is an important medium to further the development journey of Indian entrepreneurs. He asked startups and micro, small and medium enterprises (MSMEs) to look at public listing as a strategic opportunity to expand their businesses.

Speaking at the foundation day event of JITO Incubation and Innovation Foundation (JIIF) held at NSE, Chauhan said founders should focus on the operations and profits of their business and not on daily changing share prices.

He said, “Your real business lies in your operations, not in the share price. The stock market is just a reflection of your business, it is not your business.”

Ashish Chauhan said that listing in the stock market provides capital to companies to expand their business, strengthens corporate governance, increases the credibility of the company, brings in good talented people and promoters can also maintain control over their business.

He said, “Through public listing, founders can raise capital to expand their business without giving up control. Initially, promoters can bring 25 per cent stake in their company to the market, while retaining 75 per cent stake. If needed, more stake can be issued gradually later.”

He also said that listing improves the governance of the company, increases investor confidence, gets attention from analysts and also makes it easier to get loans from banks. Chauhan said that listing on the stock exchange also makes the process of succession planning and distribution of assets among family members more systematic and easier.

He said, “When you list your company, initially you keep 75 percent stake with yourself and give 25 percent to the market. Later, more stake can be issued as per the need, but the control of the company remains with you.”

Ashish Chauhan said that the stock market provides such valuation to profitable businesses, which is not possible at the private level.

Giving an example, he said that if a company is earning a profit of Rs 2 crore annually, then after getting listed in the stock market, its market capitalization can reach Rs 40 to 50 crore. This provides better opportunities to the promoter to grow the business, raise new capital, add new partners and expand.