The sharp fall after listing in the shares of startups and new age companies amid increasing attractiveness of retail investors in the stock market has alerted the market regulator SEBI. Last year there was a lot of startup listing and small investors also put in a lot of money in it. But now after a sharp fall in it, the investment of investors has come down to less than half. In view of this, SEBI has issued a proposal to change the old standards for listing of new age companies.
According to the draft proposal of SEBI, now new companies will have to provide all kinds of justification for their share price and they will be tested on several parameters. The market regulator says the old benchmarks are not sufficient to measure new companies and their financial statements need to be scrutinized to protect the hard-earned money of small investors.
New rates of petrol and diesel released, check whether it is cheap or expensive today
Experts say that the sharp fall in share prices of new companies and the loss to retail investors is very worrying. But if SEBI tightens the listing rules for new companies, it will not be easy for them to raise capital and they will not be able to move forward. Experts say most companies turn profitable after 10 years of listing. In such a situation, putting more emphasis on profits and setting standards regarding it will create problems for new companies.
SEBI worries about retail investors
Market regulator SEBI had greatly eased the listing norms for new companies, especially startups, but after the listing of Zomato and Paytm, their shares have fallen by up to 70 per cent. This has caused huge losses to retail investors. Apart from this, the shares of many companies have come down 50 per cent from listing. In such a situation, market regulator SEBI has proposed to tighten the listing norms for new companies and consider some methods for their assessment.
Half of investors’ earnings have been reduced
The share of Paytm was listed at more than Rs 2100, but its price has come down to below Rs 500 in the past. Many analysts have attributed this to the high valuation of Paytm’s shares. Similarly, the share price of other tech companies listed in the market has come down by 50 to 70 per cent from listing, reducing investor investment to less than half.
SEBI will test new companies on these parameters
The market regulator has recommended the base performance index (KFI). Apart from this, on what valuation has the capital raised in the past and how the company has performed after that will also be examined. Apart from this, the company will also have to make many other types of financial disclosures. In addition, all financial statements and claims thereof will be examined and reported by an external auditor.
Diesel prices increased by Rs 25 per liter, in Mumbai the price crossed Rs 122
SEBI has told bankers that the current valuations for IPOs on the basis of Earnings Per Share (EPS), Price of Earnings (PE), Return on Networth and Net Asset Value do not give the correct picture for the new age companies, which may lead to these The standards need to change.