SEBI Member Raises Red Flag Over How Assets Are Being Valued
A senior member of India’s markets regulator SEBI has voiced serious concerns about how companies are currently valuing their assets — and why investors should pay attention.
At a recent event packed with industry insiders, Ananth Narayan, a Whole-Time Member at the Securities and Exchange Board of India (SEBI), said the way some firms determine asset values lacks transparency and can be misleading. His message was clear: it’s time to revisit how valuations are done and bring more accountability into the process.
“Valuations Shouldn’t Be a Black Box”
Narayan didn’t hold back. He pointed out that many valuations today are treated like a “black box” — where no one really knows how the final numbers are being calculated. “We need more openness,” he said. “Key assumptions, track records of valuation firms, and how sensitive these numbers are to market conditions — all this information should be disclosed.”
In simpler terms, he’s saying that when a company tells you something is worth ₹100 crore, it should also explain how it arrived at that figure, and under what conditions that number could change. Right now, too much of that information is hidden, making it hard for investors — especially everyday ones — to trust what they’re seeing.
Why This Matters to Investors
These concerns aren’t just theoretical. They affect real people who invest their money in mutual funds, IPOs, or listed companies. If asset values are inflated or based on shaky assumptions, investors could end up overpaying or being misled about the true worth of a business.
Narayan’s remarks also come at a time when more retail investors are entering the stock market, thanks to mobile trading platforms and a surge of IPOs. With that growth, the risks of inaccurate or manipulated valuations grow too.
SEBI May Push for Stricter Rules
While no formal changes have been announced yet, Narayan’s comments suggest that SEBI may soon introduce tighter rules around how valuations are done and disclosed. This could include requiring valuers to publish their assumptions and methodologies — something similar to how credit rating agencies operate.
There’s also talk that SEBI might adopt international valuation standards to bring more consistency across the board. That would make it easier to compare companies and reduce the chances of manipulation.
The Bigger Picture
Narayan’s warning isn’t happening in isolation. In the past few months, SEBI has also raised red flags about royalty payments by listed firms and possible price manipulation in smaller company stocks (SMEs). All of this signals that the regulator is tightening its oversight — especially in areas that might appear technical but have a huge impact on investor trust.
Market experts say this renewed focus is welcome. “When the numbers aren’t clear, confidence goes down — and markets can’t run on doubt,” said a Mumbai-based fund manager who attended the event.
What Happens Next?
If SEBI follows through, companies, asset managers, and valuation firms might have to rethink how they present asset values. It could mean more paperwork and stricter reporting standards — but it also means more clarity for investors.
And for the average person looking to invest or already holding shares in companies, these changes could provide some much-needed peace of mind.
In a world where data is king, knowing how that data is being created is just as important. Narayan’s comments are a timely reminder that transparency isn’t just good practice — it’s essential for a healthy, trustworthy market.
