Skip to main content

Indian E-Commerce firms in a valuation bubble: renowned expert

Mumbai: India’s e-commerce and consumer technology start-ups, many of which have raised funds at lofty valuation in recent months, may be collectively overvalued, says Aswath Damodaran, an authority on corporate finance and valuations.
Image result for E-Commerce
While he would not hazard a guess about valuation of individual companies, taken together, the size of the macro story may not justify the micro-valuations, said Damodaran, a professor of finance at the Stern School of Business, New York University.
“I do believe that collectively, the markets that are being used to justify these valuations (online advertising in particular) are not big enough to justify the prices being paid, which I guess is a backhanded way of saying that the stocks are collectively overpriced,” he said in an interview.
Damodaran was in India to conduct a corporate finance and business valuation workshop on 10-11 August for VCCircle Network, a media and publishing company.
According to data from CB Insights, a venture capital database backed by the National Science Foundation, Indian e-commerce and consumer technology firms have raised $3.5 billion from January to June this year.
A number of these firms have seen their valuations rise with each subsequent funding round.
For instance, the valuation of e-commerce marketplaceFlipkart’s is likely to have increased to about $15 billion from less than $2 billion at the beginning of 2014. Snapdealmay be valued at $5 billion from less than $1 billion 18 months ago, according to a 11 August Mint report.
While some firms in these segments will indeed become very valuable, the challenge investors face is in determining which will be those companies, said Damodaran.
According to him, venture capital (VC) investors need to ask four questions when looking to infuse money in one of these companies: Do start-ups have a plan that goes beyond users/downloads and considers how to make money? How does the company plan to deal with failure? How does it plan to deal with success? How easily imitated is the company’s basic business model or product?


http://www.livemint.com/Companies/d3Jcm2hLqn1Xj6x2qGnIhM/Ecommerce-startups-collectively-overvalued-Aswath-Damodar.html

Comments

Post a Comment

Popular posts from this blog

Communist party launches 'China Operating System' to oust iOS and Android

hina officials have launched a national operating system in an attempt to take back control of the country’s computer market from American companies such as Google and Apple. The software has been in development for more than a year, but has been released at a crucial time with revelations about US-led surveillance sparking fears over the integrity of American-designed software. Known simply as the China Operating System, or COS, the software can run on PCs, tablets and smartphones and has been based on the open-source Linux operating system. Chinese media say that the OS has been created “entirely independently” in order to provide better localization for a range of features – from Chinese-language keyboards, to integration with the country’s banks. At the launch of the event, one of the developers involved with the project reportedly criticized Western software , saying that Apple’s iOS was too closed, that Google’s Android OS suffered from fragmentation (ie, too many versi
Post a Comment
Read more

Best IELTS and English language training institutions in Hyderabad

IELTS stands for International English Language Testing System. As the name implies it is basically an English test for testing the proficiency of the language in an individual.  Training for IELTS can be taken to pass the IELTS exam or to develop good english language skills. I am giving the training institute addresses for Hyderabad. The test system is jointly managed by the British Council,IDP education ltd and University of Cambridge ESOL Examinations and more than 1 million candidates are taking the exam all over the world. The test has two versions : 1. Academic 2. General training Academic  version is for people who plan to continue their higher education by enrolling in universities in countries like US,UK,Australia,Canada,New Zealand etc.The academic institutions in these countries consider the IELTS score as a criteria for the admission process. General training is mostly for immigration purposes in countries like Australia,New Zealand,Canada etc. It may also be u
9 comments
Read more

How to avoid injurious sitting posture at work? Take care of Ergonomics

The impact of poor consideration of these, as well as other, ergonomic elements can be very hazardous to our  well-being. Some of the effects include increase chances of suffering from carpel tunnel syndrome, decreased eye sight, cramps in our joints, strain from overworking certain muscles and joints,  and decreased blood-flow circulation. Work productivity also decreases when we are in environments that are not designed for proper ergonomics. One other important thing to consider is the lighting levels in the space. I actually did not even think of this as an ergonomic design issue, but it truly is.  Our eye muscles are the most used muscles in our entire body.  We use our eyes in every situation throughout our entire day.  Poor considerations for lighting causes very negative short and long-term effects.  It is recommended that we use mixed levels of lighting in our environments. This allows for multiple options for each user depending on his or her preferences and physical nee
Post a Comment
Read more