E-commerce firms should look at profitability, not valuation: Deepak Parekh

His remarks come at a time when Snapdeal is all set to merge with Flipkart

Deepak Parekh, chairman of HDFC Ltd, struck a note of caution to India’s e-commerce companies looking at the valuation than business fundamentals, saying a model of changing ownership between private equity firms could hurt the entire ecosystem.

“There has to be a threshold level where the revenue stream and profitability have to become key considerations, rather than just focusing on gross merchandise value. Unless these companies post cash profits, how will they ever be self-sustaining?” asked Parekh at the Indian Institute of Technology Madras (IITM) on Wednesday.

“Otherwise the model is just based on going from one private equity fund to another