We have exited the very narrow markets that we saw in 2018-2019 and pre-pandemic. Is it as per your expectation because the valuations have really run up and we started to see a selloff too? The last time we spoke with you exactly a month ago you were talking about how this time around you will start to see a profit contribution from the midcaps and the small cap space. Hiren Ved of Alchemy Capital believes Nykaa is the one recent IPO that can have sustainable growth. The rest is still up in the air in my opinion. The only debate or the question is going to be at what valuations? Amongst all the new age companies that are going for IPOs, so far the only company that has built a sustainable business and can generate sustainable cash flows is Nykaa. In the total market cap of the economy and the stock market, many of these platform companies will find a place. After every few years, there is innovation, there are new entrepreneurs, new business models and one has to make space for them. Ultimately, the markets will decide the right valuation. I think there is space for both to coexist.

The valuations can be questioned but at least it is a profitable business with real cash flows. I think Nykaa has built a phenomenal business. However, once you acquire the customer, how you are able to monetise that customer is going to be extremely important. Today on the online platform, the ability to acquire customers goes up very dramatically. Traditionally, the Levers and the Maricos and the Godrej of the world took years and years to build their distribution. We are now seeing the birth of platform companies which have the ability to acquire customers at a very rapid pace and reduce friction. The difference is that we have seen some very high quality vertical companies so far in India. It is quite interesting and it is creating a lot of dilemma amongst investors on how to look at companies. So what will change now? Will Nykaa come down or will Britannia and Godrej and Marcio go higher? These three companies have cash flows, strong return on equity and have growths of 15% to 20%. Nykaa has a market cap of Rs 1 lakh crore, which makes it more valuable than Britannia and Marico and Godrej Consumer. But we are still in the very early stages of this bull market,' says Hiren Ved, Co-founder, CEO, Director & CIO, Alchemy Capital Management. The breadth will continue to improve as the bull market matures. 'I continue to be bullish on the broader markets.

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