SEBI on IPO Valuation: Securities and Exchange Board of India (SEBI) Chairman Tuhin Kant Pandey has said that SEBI will not interfere in any way regarding high valuation in Initial Public Offering (IPO). He clarified that determination of valuation depends on the assessment of the market and investors and not on the control of the regulator.
What did SEBI Chairman say?
According to news agency PTI-Bhasha, while talking to journalists during a program on Thursday, Pandey said – We do not decide the evaluation. It completely depends on the assessment of the investor. The market should have the freedom to determine prices independently based on opportunities. This statement has come at a time when concern was raised in the market regarding the high valuation of Lenskart’s Rs 7,200 crore IPO recently.
The SEBI chief acknowledged that valuation concerns have been raised many times in the past — especially during the IPOs of new-age digital companies like Nykaa, Paytm. In these cases too, questions were raised among investors whether the valuations of the companies were in line with their actual earnings and prospects.
At the event, Pandey also told companies that they should be ‘authentic and transparent’ about their environmental, social and governance (ESG) commitments. He said – ESG should not just be a part of branding. It should be linked to measurable results, independent audits and actual board oversight. He also added that in today’s time, ESG is not an optional option, but an essential component for business sustainability.
Suggestions on new challenges
SEBI Chairman urged the directors and senior management of companies to enhance their capacity in the following areas — Cyber Risk Management, Behavioral Science, Data Ethics and Sustainability. He said that in today’s time, the complexity of the market cannot be handled by formal oversight alone, but it requires informed and prudent judgment.
This clear stand of SEBI shows that the regulator will not interfere in IPO valuation. Now investors will have to take investment decisions at their own discretion. Also, the regulator’s focus will now be on strengthening the ESG compliance and corporate governance of companies, so that transparency and accountability are maintained in the market.
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