IPO valuations driven by market forces; SEBI’s role is to ensure full disclosure: Tuhin Kanta Pandey

Amid growing concerns over inflated valuations in recent initial public offerings (IPOs), Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey on Friday clarified that the regulator’s role is limited to ensuring transparency and full disclosures, not determining valuations.

Pandey emphasised that the pricing of IPOs is determined by market dynamics. “SEBI always thinks of transparency. We don't determine valuations, and it remains on the 'eyes of the beholden' and the investor. We cannot intervene in the markets... and decide what would be the price of the shares. Share prices will be decided by the markets, depending on the opportunities,” he said, ANI reported.

He added that SEBI’s focus is to ensure that investors have access to accurate and comprehensive information so that markets can independently determine share prices.

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“SEBI's main role is to ensure disclosures are robust. We have mandated font size and disclosure of comparatives. We are largely focused on information and disclosures; the rest has to be determined by the capital market itself,” Pandey said.

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‘India’s BRSR framework is robust and locally adapted’

Speaking on the subject of Business Responsibility and Sustainability Reporting (BRSR), Pandey dismissed the notion that the standards are uniform across the board, calling India’s framework “fairly robust” and tailored to local needs.

“They are not one size fits all standards. In fact, India's BRSR regime is fairly robust and there is also a BRSR core,” he said.

He further elaborated on the scope of implementation, noting that over 1,200 companies are voluntarily adopting BRSR reporting.

“So in case of BRSR, we have mandated 1,000 listed entities and in fact more than 1,200 companies are actually doing it. So that means there are more companies voluntarily to give it. And BRSR core where we have got 46 parameters which will be subject to assurance or assessment system. And there is also a gradual rollout of that. I think ESG roadmap is fairly robust and well thought of and also suitable to Indian needs,” he added.

BRSR is a sustainability reporting framework that allows companies to disclose their non-financial performance on parameters such as Environment, Social, and Governance (ESG).

Responding to questions on public sector undertakings (PSUs) lacking the minimum number of independent directors on their boards, Pandey said, “We will only request that the government and the different ministries to appoint the independent directors on time.”

Also Read: Financial intermediaries key to strengthening market integrity: SEBI Chairman Tuhin Kanta Pandey

‘SEBI aims for a balanced regulatory approach’

Pandey also spoke about SEBI’s approach to regulation, underlining the importance of balancing market development with investor protection. “Regulations play a constructive role for market development, but if the regulations become too constraining, too overreach, and too micromanaging, then they may become problematic,” he said.

He added that SEBI’s framework is designed to be both “progressive” and “balanced.” “We have to look after both the sides—the investors and the issuers—and move forward in a 'balanced way',” he noted.

‘Investor trust drives market growth’

Citing the mutual fund industry as an example, Pandey said sound regulation fosters both trust and growth. “Because if the investor protection were not there, the market will also not grow. Take the instance of mutual funds, the mutual fund industry has grown and the investor trust into it also grew because of our regulations,” he said.