The Great Indian Valuation Bluff: How "Market Comparable" Became the Most Abused Phrase in Finance

You have probably seen the line in a valuation report that says, "based on market comparables.”

It sounds solid as if the number came directly from the market not from someone’s opinion.

However most of the time that is not really true.

What This Phrase Should Mean

The idea is simple. To determine a company’s you look at similar companies. You observe what they are valued at. Then you use that as a guide.

That is an idea but it is also very easy to bend.

The Problem

No two companies are alike. Someone always has to choose:

- Which companies count as "similar”?
- Which ones get left out?
- Do we use public companies, private deals or both?
- Do we use today’s real numbers or hopeful future ones?

Here is the part that nobody says loud: these choices can be made to fit almost any number you want.

If you want a value pick the fastest‑growing priciest companies. Call them "similar ”

If you want a value pick the slower cheaper ones instead. Skip the rest.

Both can be called "market analysis." Both can look professional.. They can produce two very different numbers for the same company.

A Simple Example

Suppose there is a fast‑growing software startup.

An investor who wants a lower price compares it to old slow‑growing software companies.

A founder who wants a higher price compares it to today’s tech companies.

No one is really lying. They are simply picking comparisons that match what they already want. This is why "market comparable" is often misused. It sounds neutral. The choices behind it are usually not neutral.

Why This Matters, to You?

If you are a founder, a CFO or an investor do not stop trusting comparisons altogether. Just stop trusting the phrase by itself.
The time you see "based on market comparables " ask three questions:

- Which companies were used. And why these ones?
- Were any similar companies left out? Why?
- Are these similar‑sized companies. Or just similar‑sounding ones?

If nobody can answer those questions clearly that is a warning sign.

The Bigger Point

“Market comparable" should open up questions not shut them down.

A good valuer will explain their choices. They will tell you what they left out. They will admit where the comparison is not perfect.
A weaker one simply says "based on market comparables". Hopes you do not ask what is inside.

The next time you hear that phrase do not simply nod. Ask what is inside.

At RegisteredValuer.com every part of a valuation should survive a question. If it cannot it is not analysis. It is a guess wearing a suit.