The new-age companies that went public in India had the venture capitalist take away virtually all of their excess returns while they remained private, and when they went public
Illustration: Chaitanya Dinesh Surpur
India has always been a market which has been driven by public markets and public market investors. Where public markets are involved, the rules of public market investing are applied across companies of all shapes, sizes and hues.
The metrics are straightforward: Public market investors will ask questions about a company’s return on equity, return on capital, cash flow generation, capital expenditure programme, governance practice which includes accounting, and then all these factors are going to be coalesced into a view on the company’s valuation using standard methods like PE (price-to-earnings), price/book value (P/BV).
Whether in a primary market offering or in the secondary market, just look at all the above factors, and then place your bets.
(This story appears in the 05 April, 2024 issue of Forbes India. To visit our Archives, click here.)