Key Takeaways
- SEBI will not interfere with IPO valuations, leaving pricing decisions to market forces
- Companies must adopt authentic ESG practices with third-party verification
- Boards need to institutionalize ethics and enhance competence in emerging areas
- SEBI plans regulatory simplification to balance oversight with innovation
SEBI Chairman Tuhin Kanta Pandey has firmly stated that the market regulator will not interfere with company valuations during IPOs, emphasizing that pricing should be determined by investor sentiment and opportunity perception rather than regulatory intervention.
Speaking in Mumbai on Wednesday, Pandey addressed concerns about stretched valuations in recent public offerings, including Lenskart’s ₹7,200-crore issue that some analysts consider overvalued.
Market-Driven Valuations
“We don’t determine what the valuation is. It lies in the eyes of the beholder – the investor,” Pandey told reporters. He clarified that SEBI’s role focuses on ensuring transparency, proper disclosures, and investor protection rather than pricing matters.
“The market must freely determine the valuations depending upon the opportunities it perceives,” he added, referencing similar valuation concerns during Nykaa and Paytm IPOs that saw post-listing corrections.
Authentic ESG Implementation
At an event organized by Excellence Enablers, Pandey stressed that ESG (Environmental, Social, and Governance) practices must be genuine rather than mere branding exercises.
“ESG needs to be attached to quantifiable results assured by a third party with real board involvement,” he stated, describing ESG as a strategic advantage opportunity rather than an optional compliance requirement.
Strengthening Board Governance
The SEBI chief called for institutionalizing ethics within corporate boards, treating organizational culture as a measurable asset comparable to financial metrics.
He recommended governance scorecards to monitor cultural health through employee feedback, whistleblower trends, and ethical behavior tracking. Pandey also proposed board-level ethics committees as early warning systems.
Directors must enhance their expertise in emerging domains including , data ethics, behavioral science, and sustainability, he noted, emphasizing that “today’s complex markets require informed judgment, not ceremonial oversight.”
Regulatory Simplification
Pandey highlighted the need to balance oversight with innovation, avoiding regulatory overreach while maintaining accountability.
SEBI plans to review and simplify existing regulations through industry and investor consultations to ensure regulations remain clear, contextual, and forward-looking.
