An impossible IPO problem

NATC. It's a nice new acronym that has been invented and now even has the official blessings of SEBI, which has used it in a consultation paper on 'Disclosures for Basis of Issue Price section in the Offer Document' in IPOs. It means 'new age technology company', which unfortunately, has no precise meaning that can be pinned down. A far better acronym would be CTHNMAPAPNS. This stands for 'company that has never made a profit and probably never shall' and unlike the vague hand-waving 'new age technology company', it has a precise meaning that conveys something useful to the investor. In fact, it encompasses the single most useful fact about an IPO company that an investor should be concerned with. So in this column let us discuss CTHNMAPAPNS. The need for the SEBI consultation paper arises out of this fact, that these companies have never made a profit. All the existing mechanisms for figuring out what the appropriate stock price of a company shoul