A global stock rout has reset valuations of technology companies in India and investors need to adjust to the new normal, according to Kamal Yadav and Sachin Wagle, co-heads of Morgan Stanleys India investment banking unit.  

The Wall Street bank completed two record years for mergers and acquisitions and initial public offerings in India. They included the $27 billion fundraising blitz by tycoon Mukesh Ambanis non-energy businesses in 2020 and a $2.5 billion IPO by fintech firm

Paytm, the countrys biggest. 


Kamal Yadav, left with Sachin Wagle.

But it wasnt all good news for the bank.

Paytms trading debut in November turned out to be the

worst for any major technology stock since the dot-com bubble era of the late 1990s. In a rare interview, Mumbai-based Yadav, 50, and Wagle, 45, discuss stock volatility and the outlook for technology stocks and mergers and acquisitions. 

Here are the highlights from the interview:

Q. How is this global stock rout and volatility affecting fund raising plans?

Wagle:  Theres a reset in valuations in the public market, which one would expect to percolate to the private markets as well in the near term. We are seeing boards and founders being cognizant of current market realities too, which is healthy. If one wants to raise funds, they have to accept the new normal, as the current pricing is here to stay. 

Q. How different are Indian technology stocks in this rout?

Yadav: Technology companies in India have been more resilient to such corrections than those in most other markets. They have seen multiple cycles, at least five rounds of funding crunches since the turn of the century. It forced these Indian startups to focus on unit economics to keep the cash burn in check. These factors, along with favorable demographics of the country and its less fragmented nature, work in favor of Indian technology sectors growth.

Q. Will the mega IPO of

LIC derail the listing pipeline of the companies?

Wagle:  The Indian equity markets are very deep across all pockets of investors. Today theres enough and more liquidity and can definitely absorb mega IPOs like LIC.

Q. How has Morgan Stanley managed people resources as deal volume surged?

Wagle: 2020 and 2021 have been incredibly busy years, and together with the entire team, the focus was to execute. For better work-life balance, the bank has added 10 people to its investment banking team over the past year, taking the overall headcount to over 25. This is the biggest addition to our team since 2008.

Q. What is the outlook for deals in India?

Yadav: The wave of digitization in India is irreversible, and the deal pipeline in the technology space continues to be quite strong, obviously with a reset in valuation and pricing multiples. There would be lot of deals in the real estate, financial institutions and consumer sectors as well this year. We dont expect the deal activity in 2022 to be less than that in 2021.

With assistance by Sanjit Das