‘Paytm, Zomato should give a third of their value to Jio’

Noted academic and valuation guru Aswath Damodaran talks about India’s tech story — what worked, what did not and the challenges ahead for Unicorns after a pivotal year for startup IPOs

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Aditi Shrivastava

December 16, 2021

19 Min Read

Aswath Damodaran, a professor of corporate finance and valuations at the NYU Stern School of Business, would rather be transparently wrong than opaquely right.

“Let’s face it: for the past 50 years, India’s biggest pitch has been that we have a billion people,” he says, adding that the country’s inflection point has been cheap internet connectivity and Chinese smartphones.

Professor Damodaran discusses India’s growth potential and several important themes related to the Indian startup ecosystem in a long and insightful chat with Aditi Shrivastava. 

He explains why he believes that Paytm has a much bigger potential market than Zomato, why Indian tech companies are trading at higher valuation multiples than global peers, and who deserves credit for rapid internet adoption in the country. He also touches upon the funding surge — how risk capital has been widely available during the Covid-19 crisis and how it can all change in almost an instant.

He raises pertinent questions about India’s broader technology story and founders’ tendency to not relinquish control. “I understand why founders want to hold on. But ultimately, you have to be dispassionate enough and say, look, I’m going to give up control for the company’s health. Because 20% of a billion-dollar company is worth more than 100% of a million-dollar company,” he says.

Professor Damodaran is uniquely placed to offer such views, having tracked the technology scene in the US and India. He grew up in Chennai in the 1960s and 70s, completing his BA in accounting from Madras University and MS in management from the Indian Institute of Management, Bangalore. He earned an MBA (1981) and then PhD (1985) in finance from the University of California, Los Angeles. 

He writes a blog on finance and big-tech companies and comes up with DIY valuations on his YouTube channel, which has around 388,000 subscribers.

This interview has been edited for length and clarity.

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