As the landscape of global business continues to evolve, public companies are facing a complex array of trends and challenges that will shape their future. This article explores the current and anticipated dynamics affecting public companies, beginning with an overview of their fundamental characteristics and the inherent advantages and disadvantages they offer. It delves into emerging trends such as technological advancements, sustainability initiatives, and shifts in corporate governance, which are significantly influencing how these companies operate and strategize.

Additionally, the article addresses the challenges public companies encounter, including regulatory pressures, cybersecurity threats, and market volatility. By examining various sectors poised for substantial returns, the paper provides insights into investment opportunities and strategic directions. Through a comprehensive analysis, the study aims to offer a nuanced understanding of the future trajectory of public companies and practical recommendations for navigating the evolving business environment.

Introduction
Many of us have seen The Wolf of Wall Street, which depicts the thrilling thrill of hitting it rich on Wall Street, or Succession, which shows boardroom fights and corporate intrigue as commonplace. Going public is frequently the ultimate power move, a means of raising enormous sums of money, gaining recognition, and sometimes even just staying competitive. However, the real-life rush to go public in India is a different story, despite how thrilling it may appear on screen. The trend of private firms going public and individual investors flooding mainboard and SME IPOs with cash has spread like wildfire.

India is only beginning what Morgan Stanley Research anticipates will be a decade of record growth[1], with its economy potentially overtaking Germany and Japan to become the third largest in the world by 2027. Simultaneously, the stock market is expected to finish this decade ranked third globally. Following the election, incumbent Prime Minister Narendra Modi will serve a third term in office, with his party ruling a majority alliance in Parliament. Because of the market's increased confidence in India's economic prospects, stock valuations have increased, discounting future cash flow forecasts at lower rates of return. Nevertheless, investors might be overlooking further crucial elements that could support India's longest and greatest bull market ever.

"The market may have largely priced in expectations for growth tied to leadership continuity, but we see a number of reasons, such as growing domestic investment in equities, improving social equity and a fast-evolving tech sector, that support earnings cycle growth and a corresponding lift to share prices," says Ridham Desai, Morgan Stanley's Chief Equity Strategist for India. "These and other changes that could boost earnings 20% annually for the next five years still aren't baked into share prices."

What are Public Companies?
Companies that trade their stocks on a public exchange are known as public companies. A public corporation allows investors to become shareholders through the purchase of shares of the company's stock. Since anyone with an interest in investing can buy firm shares on a public exchange and gain equity ownership, the company is regarded as public. A public corporation must have an annual general meeting (AGM) where shareholders vote to choose new members to the board of directors, discuss policies, and create new objectives, guidelines, and policies that will drive the firm's activities. Profits are dispersed to shareholders based on the number of shares they possess. Each shareholder is entitled to a portion of the company's profits.

A significant percentage of publicly traded companies were once private, and they became public to access a larger capital source for funding their ventures or operations. An Initial Public Offering (IPO)[2] is a step in the process of turning a business into a publicly traded company. The Securities and Exchange Commission (SEC)[3] must approve the IPO and ensure that it complies with all legal criteria. An IPO's main goal is to raise money for the issuing firm by selling shares to the general public.

Advantages of Public Companies

• Ability to raise funds by selling stock
  One notable advantage of public companies is their ability to generate capital by selling shares to the public. Prior to going public, securing substantial funds is challenging for a company, as it typically relies on borrowing to finance operations and new ventures. Private companies usually obtain funding by reinvesting profits, taking out loans, or attracting investments from a limited number of wealthy individuals, which may not be sufficient to cover significant financial needs. In contrast, public companies can access large amounts of capital through both primary and secondary markets[4] by offering shares to a broad investor base. This capacity to raise substantial funds on public exchanges supports capital-intensive projects. Shareholders benefit from this arrangement through potential capital gains and dividend payments.
   
• Availability of financial information
  Financial statements, which must be filed with the SEC on a quarterly and annual basis, are mandatory for public corporations. Shareholders, financial journalists, potential investors, and financial analysts can obtain more information about the company thanks to this requirement. Analysts can more easily determine the company's valuation because to the availability of financial data about the business. On the other hand, there is no legal obligation for private enterprises to disclose their financial reports to the public. In order to inform both present and potential investors about their financial performance and the company's future, public corporations are driven to comply with disclosure regulations.

Funding for M&A Transactions
A greater value enables the corporation to use its stock to fund corporate mergers and acquisitions with less shares exchanged or more cash raised. For M&A, cash revenues from an IPO or upcoming stock offerings may be obtained. Effective mergers and acquisitions result in increased company revenue and profits as well as synergies.

Reducing Corporate Debt
Public corporations can lower interest expenses, increase cash flow, and lower their debt-to-equity ratio[5] by retiring debt through an IPO or future share sales.

Maintaining Corporate Identity and Becoming Better Known
Opting for an IPO as an exit strategy allows a company to retain its corporate name and status, unlike being acquired by another firm. This preservation of the company's identity and name recognition can be significant for the founder. Companies that undergo an IPO gain increased visibility, attracting potential customers and new strategic partners through press releases and media coverage. Additionally, public companies are subject to greater transparency compared to private companies, as they are required to disclose financial statements and other information publicly.

Disadvantages of Public Companies

• Increased government and regulatory scrutiny
  Public companies are vulnerable to increased scrutiny from the government, regulatory agencies, and the public. The company must meet various mandatory reporting standards that are set by government entities such as the SEC and the IRS. For instance, the Sarbanes-Oxley Act of 2002 (SOX) imposes many compliance and administrative rules on public companies. A byproduct of the Enron and WorldCom corporate failures in 2001 to 2002, SOX requires all levels of publicly traded companies to implement and execute internal controls[6]. The most contentious part of SOX is Section 404, which requires the implementation, documentation, and testing of internal controls over financial reporting at all levels of the organization[7]. They must also prepare their financial reports in accordance with the Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). Shareholders are also entitled to key documents on the business activities of the company.
   
• Cost of Issuing Shares in an IPO
  The investment banker syndicate serving as underwriters receives a hefty percentage-based underwriting fee for shares sold in the IPO. In 2017, Statista reported that IPO underwriting fees[8] ranged from about 4% to 7% in the United States, varying by deal size. The substantial amount of capital raised by the IPO company mitigates this disadvantage because underwriting fees are deducted from IPO gross proceeds.
• Higher Weighted Average Cost of Capital
  The cost of equity, determined using the capital asset pricing model (CAPM)[9], is higher than the cost of debt. Raising new public equity will increase the company's weighted average cost of capital (WACC)[10]. WACC is a hurdle rate for decision-making to evaluate capital expenditure projects expected to contribute to growth. This objection is offset by the substantial amount of capital that can be raised in an IPO.

Recent Trends shaping the future of public companies
Emerging trends shaping the future of public companies are influenced by rapid technological advancements, evolving market dynamics, and changing societal expectations. These trends are shaping how public companies operate, interact with stakeholders, and position themselves for future success. The past decade has been momentous for the Indian economy culminating into India becoming the 5th largest economy in the world. This pace of development has been on account of various tailwinds like an almost doubling of the GDP from ~USD 2 trillion in 2014 to ~USD 3.7 trillion in 2023 and FDI inflows of USD 600+ billion[11].

Multiple government policy initiatives like Make in India, GST, PLI Scheme and Digital India have given a fillip to the economy, transforming it rapidly into a digital one with digital transactions having a lion's share of 55% of the GDP in FY22[12]. This has also led to India's emergence as the 3rd largest ecosystem for startups globally, producing 100+ unicorns with a total valuation of USD 340+ billion[13].

Development in the overall economy was also reflected in the primary and secondary markets performance. India has witnessed tremendous growth in funds raised through IPOs coupled with Nifty 50 growing at a 12% CAGR[14]. Over time, the average IPO size has increased significantly, from INR 400 Cr to INR 1,500 from 2004-10 to 2017-20[15].

Another theme that has emerged in the Indian markets is listing of companies in newer sectors like affordable housing finance, specialty chemicals, insurance and AMCs, amongst others.

The important emerging trends shaping the future of public companies are described as below:

• Technological Advancements
  Companies are increasingly adopting digital technologies to enhance efficiency, customer experience, and decision-making. This includes cloud computing, big data analytics, and digital platforms. AI and machine learning are being leveraged for predictive analytics, process automation, and personalized customer interactions. Robotic Process Automation (RPA) is streamlining routine tasks. Blockchain is gaining traction for its potential to enhance transparency, security, and efficiency in transactions and record-keeping
   
• Sustainability and ESG (Environmental, Social, and Governance) Initiatives
  While India has been slower compared to its global counterparts in adopting ESG[16], the pace of adoption has increased, to comply with various norms/initiatives by SEBI. ESG compliant new age tech companies in India have an edge over others in accessing primary markets, especially considering that a few Indian tech companies have come under the scanner for their governance practices. High standards of governance can prove to be an important differentiating factor for investors selective in deploying their funds.
   
• Shifts in Corporate Governance and Leadership
  There is a trend towards more rigorous corporate governance practices[17], including diversity in boards, ethical leadership, and stronger oversight mechanisms. Leaders are expected to have a broader skill set, including digital literacy and a focus on corporate responsibility and stakeholder engagement.
   
• Market Globalization and Expansion Strategies
  Public companies are exploring new markets and regions for growth opportunities, driven by globalization and trade liberalization. There is an increase in cross-border deals as companies seek strategic advantages and access to new markets.

Changing Investor Expectations
Investors are shifting from short-term gains to long-term value creation, emphasizing sustainable growth and financial health. There is a rise in shareholder activism, with investors demanding greater accountability and changes in corporate strategy or management.

Cybersecurity and Data Privacy
As digital operations expand, companies face heightened cybersecurity risks, necessitating robust data protection and risk management strategies. Companies are navigating complex regulations regarding data privacy and protection, such as GDPR[18] and CCPA[19].

Workforce and Talent Management
The COVID-19 pandemic has accelerated the adoption of remote and hybrid work models, influencing how companies manage and engage their workforce. There is a growing focus on attracting and retaining top talent, with companies offering flexible working arrangements, professional development opportunities, and competitive compensation.

Consumer Behaviour and Expectations
Companies are leveraging data to provide personalized experiences and enhance customer satisfaction. Consumers are increasingly supporting companies with ethical practices, driving businesses to align their offerings with consumer values.

Financial Innovation
Companies are adopting financial technologies to streamline transactions, improve financial management, and offer innovative payment solutions. There is a rise in alternative financing methods such as crowdfunding, peer-to-peer lending, and venture capital.

Challenges faced by public companies
The public sector is undoubtedly one of the supporting pillars of any functioning society. However, despite being a provider of services to better the general public's lives, the public sector is not without its challenges. If the pandemic taught us anything, it is the appreciation for everything the public sector and its dedicated staff do for us, often working behind the scenes with limited capacity and resources.

Public sector organizations are currently grappling with a significant challenge: the accelerating pace of digital transformation, which has exacerbated the global shortage of digital skills.

This issue manifests in several ways:

• The pressure to undertake digital transformation initiatives without adequate support systems or funding.
• The need to become more 'customer-centric' while lacking expertise in Salesforce within federal agencies.
• The challenge of meeting salary expectations for sought-after cloud professionals, particularly for onshore development talent, compared to the private sector.
• The public sector's traditional culture can hinder the adoption of agile methodologies, making it harder to attract remote and hybrid candidates.
• A notable lack of diversity within the public sector.

The archaic systems and modes of working in the public sector are turning away younger people.

According to a report[20] from the Organisation for Economic Co-operation and Development (OECD) countries—consisting of 37 nations from North and South America to Europe and Asia-Pacific—the largest age bracket in the public services is likely to be between the ages of 40-49, with a significant proportion of employees between the ages of 50-54 and 55-59. In comparison to the private sector, the public sector's ratio of younger employees is notably smaller.

Short-term pressure from shareholders
The legal requirement for Public Limited Companies to increase shareholder value presents another difficulty, as it leads to immediate pressure from shareholders. Demands from shareholders for quick returns on investment and outcomes might push businesses to prioritize short-term profitability above long-term expansion and sustainability. This strategy may result in underinvestment in marketing, R&D, and other areas that are essential to long-term success. Companies must effectively communicate with shareholders and outline the company's long-term strategic intentions in order to solve this difficulty of striking a balance between long-term aims and shareholder expectations.

Regulatory and Compliance Pressures
A company has to abide by a number of laws, including those pertaining to social responsibility, the environment, and financial reporting. This can be a difficult and expensive procedure, and failure to comply may result in penalties, legal action, and reputational harm for the business. Businesses must give compliance top priority and implement strong compliance systems in order to handle the regulatory framework difficulty they confront.

Cyber security threats
Significant amounts of data, especially sensitive data like financial and customer information, are stored by public limited companies. Cybersecurity risks like phishing, data breaches, and hacking can cause a company to suffer major financial losses as well as reputational harm. Businesses must have strong cyber security measures in place, such firewalls, data encryption, and employee training on cyber security best practices, to tackle this difficulty.

Economic Uncertainty
Trade conflicts, governmental policy changes, and geopolitical instability are some of the factors causing economic uncertainty for the Companies. Companies may have difficulties as a result of economic uncertainty on pricing, supply chains, and demand. Companies need to create solid backup plans and keep a healthy balance sheet in order to weather economic downturns in order to overcome this difficulty.

Sectors Likely to Provide Excellent Returns to Investors in Future[21]
According to the Asian Development Bank, the Indian economy is expected to grow by approximately 8% in the next 5-6 years[22], endorsed by increasing public investment in infrastructure and a pickup in private sector investment. Investors, motivated by the results of their investments in the past fiscal year, are prepared to devote a significant gear percentage of their savings to capital instruments in the forthcoming years[23]. They are also motivated to invest in the growing industries in India.

Numerous experts speculate that the Indian Stock Market will also have progressed and expanded to the fifth largest in the world, accounting for the highest market capitalization[24]. The market grows with various stepping elements supporting this expansion, such as government initiatives, foreign relations, market dynamics, etc[25].

The following sectors are likely to perform exceptionally well in the next couple of years:
Healthcare and Insurance Sector
Due to an ageing population, an increase in chronic illnesses, and a growth in disposable income, India's demand for healthcare services is on the rise. In addition, the COVID-19 epidemic has also brought attention to the need for improved healthcare services and infrastructure in India, encouraging further investment.

Ayushman Bharat[26], a program that intends to offer health insurance to more than 100 million people, is one of several efforts the Indian government has made to improve the healthcare industry. Also, the government has raised the healthcare budget, creating investment opportunities and better healthcare services.

In India, the healthcare industry embraces cutting-edge technology like telemedicine, electronic medical records, and digital health platforms, giving the industry's businesses new development potential. Nevertheless, India's healthcare and insurance industries provide promising prospects for expansion and advancement in the years to come. Businesses in these industries may use the increased demand for healthcare products and services, government efforts, technology improvements, and increasing health insurance penetration to expand their market share and open up new business possibilities.

Following are some of the companies worth considering in this sector- Sun Pharmaceutical Industries, Divi's Laboratories, Dr Reddy's Laboratories, Cipla, Apollo Hospitals Enterprise

Renewable Energy Sector
By 2030, India wants to have 450 GW of renewable energy capacity, comprising 5 GW of small hydropower, 10 GW of biofuels, 280 GW of solar power, and 140 GW of wind power[27]. With India's renewable energy industry expanding quickly in recent years, the nation has made tremendous progress toward meeting this objective. The building of ultra-mega solar parks and deploying solar rooftop programs are only two of the steps the Indian government has started to promote the use of solar energy. In addition, the construction of offshore wind energy projects is one of several measures the government has begun to encourage wind energy usage.

The Indian government is supporting the use of additional renewable energy sources, such as bioenergy and small hydropower, in addition to solar and wind power.

Nevertheless, India's renewable energy industry is anticipated to continue to expand quickly in the coming years because of favourable government policies, falling costs for renewable energy technology, and rising demand for clean energy.

Following are some of the companies worth considering in this sector in India: Reliance Industries, Oil & Natural Gas Corporation, NTPC, Open Grid Corp, Adani Green Energy

IT Sector
India has long been a significant player in the global IT sector because of its abundant supply of highly qualified workers and hospitable business climate. As a result, the nation's IT market has been expanding quickly, and by 2025, sales are anticipated to exceed $300 billion[28].

The IT industry in India has recently shifted towards more modern technologies like cloud computing, AI, and the Internet of Things. The government has started several programs to encourage the development of these technologies in the nation, and several Indian IT companies are making significant investments in these fields. The Digital India program, which seeks to offer broadband connection to all residents and encourage the use of digital technology in the nation, is one of the efforts the Indian government has made to assist the expansion of the IT sector.

Overall, favourable government regulations, a sizable pool of qualified workers, and rising demand for digital technology are projected to fuel India's IT sector's continued strong growth in the years to come. Yet, the industry may encounter difficulties, including a skill gap, increased labour prices, and heightened international rivalry.

Following are some of the companies worth considering in this sector: Reliance Industries, Tata Consultancy Services, Infosys, HCL Technologies, Wipro

Real Estate Sector
With several legislative reforms and changes in the regulatory environment, India's real estate market has recently undergone a period of transformation and consolidation. As a result, the industry has been dealing with difficulties like a decrease in demand, problems with financing, and delays in project completion. Yet, the Affordable Housing Program[29] and the Real Estate Regulatory Authority[30] are only two of the government's recent attempts to support the expansion of the real estate industry (RERA). These programs aim to increase openness and accountability in the housing industry and provide affordable homes to society's middle- and low-income sectors.

Overall, it is anticipated that the Indian real estate industry will continue to confront obstacles shortly, but the sector's long-term prospects are still promising. Favourable government policies, growing urbanization, and commercial real estate market expansion are all anticipated to be positive factors for the industry.

Following are some of the companies worth considering in this sector- Indiabulls Real Estate, Oberoi Realty

Fast-Moving Consumer-Goods Sector (FMCG)
Fast-Moving Consumer Goods (FMCG) have seen significant growth in India over the past several years due to reasons including rising earnings, shifting lifestyles, and increased urbanization. The industry offers goods, including packaged food and drinks, toiletries, and cleaning supplies. The growing demand for healthy and organic products is one of the significant trends in the Indian FMCG industry. As consumers' awareness of their health increases, they look for natural, organic, and chemical-free products. By introducing new goods and spending money on research & development in this field, several FMCG firms in India are responding to this trend. The growing emphasis on e-commerce and digital marketing in the Indian FMCG industry is another trend. Several FMCG firms are investing in e-commerce platforms and digital marketing due to the rise of online shopping to contact customers directly.

The Make in India program[31], which aims to promote manufacturing in the nation, and the National Food Processing Policy[32], which seeks to increase food processing and decrease food waste, are just two initiatives the Indian government has launched to support the growth of the FMCG sector.

The FMCG industry in India is anticipated to develop quickly over the next several years due to increased consumer demand, rising incomes, and supportive governmental regulations. Nonetheless, the industry may encounter difficulties, including escalating rivalry, growing raw material costs, and shifting customer tastes.

Following are some of the companies worth considering in this sector- Hindustan Unilever Ltd. (HUL), ITC Limited, Nestle India, Britannia Industries, Godrej Consumer Products

Automobile Sector
With a 7% share of India's GDP and millions of workers, the car industry substantially contributes to the nation's economy[33]. Manufacturers of passenger automobiles, commercial vehicles, two-wheelers, and three-wheelers are included in this industry. The Indian automotive industry has faced several difficulties recently, including decreased demand, regulation changes, and a move toward electric vehicles. Yet, the industry is anticipated to rebound in the coming years, propelled by growing incomes, accelerating urbanization, and infrastructural growth.

The Faster Adoption and Manufacture of Electric Vehicles (FAME)[34] plan, one of the numerous initiatives the Indian government has announced to help expand the automotive industry, intends to encourage the use of electric cars nationwide. In addition, the government has also launched several other initiatives to support the manufacturing industry, including the Production Linked Incentive (PLI) program[35].

Following are some of the companies worth considering in this sector: Maruti Suzuki India Ltd., Eicher Motors Ltd, Automotive Axles Ltd, Munjal Showa Ltd, Motherson Sumi Systems Ltd, Endurance Technologies Ltd, Jamna Auto Industries Ltd

Conclusion
In conclusion, Public Limited Companies registered under the Companies Act, 2013, face a range of challenges in today's business environment, including increased competition, short-term pressure from shareholders, changing market trends, regulatory compliance, managing risk, cyber security threats, and economic uncertainty. However, by implementing appropriate strategies and measures, these challenges can be overcome. In order to foster openness, creativity, innovation, and trust, public sector organizations need to go out of their way to reach and retain as wide a pool of candidates as possible.

This can be achieved by investing in the following initiatives like Leadership development programs, Workplace ED&I training, Cross-training programs (such as Revolent[36]), Internships and apprenticeships, Mentoring programs, Collaborative and/or distributed leadership, Stay interviews, Employee affinity and/or resource groups. Future research could explore the long-term impact of emerging technologies on public company operations, investigate the effectiveness of different ESG strategies, and analyze the role of corporate governance in mitigating risks and enhancing performance. Additionally, studies examining the global impact of market disruptions and their implications for public companies will be valuable.

In conclusion, public companies are at a pivotal juncture, facing a landscape that is rapidly transforming. By understanding and adapting to these changes, companies can position themselves for success and create value for their stakeholders in an increasingly dynamic world.

End Notes:

1. https://www.morganstanley.com/ideas/investment-opportunities-in-india
2. https://corporatefinanceinstitute.com/resources/valuation/ipo-initial-public-offering/
3. https://www.sec.gov/
4. https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/secondary-market/
5. https://corporatefinanceinstitute.com/resources/commercial-lending/debt-to-equity-ratio-formula/
6. https://www.investopedia.com/articles/stocks/08/public-companies-privatize-go-private.asp
7. https://www.congress.gov/107/plaws/publ204/PLAW-107publ204.pdf
8. https://www.statista.com/statistics/533357/underwriter-fees-in-usa-ipo-by-deal-size/
9. https://corporatefinanceinstitute.com/resources/valuation/what-is-capm-formula/
10. https://corporatefinanceinstitute.com/resources/valuation/what-is-wacc-formula/
11. https://www.avendus.com/india/avendus-eye/future-of-tech-ipos-in-india
12. https://www.avendus.com/india/avendus-eye/future-of-tech-ipos-in-india
13. https://www.avendus.com/india/avendus-eye/future-of-tech-ipos-in-india
14. https://www.avendus.com/india/avendus-eye/future-of-tech-ipos-in-india
15. https://www.avendus.com/india/avendus-eye/future-of-tech-ipos-in-india
16. https://corporatefinanceinstitute.com/resources/esg/esg-environmental-social-governance/
17. https://www.pwc.ie/services/workforce/insights/the-eight-key-effective-corporate-governance-practices.html
18. https://gdpr.eu/what-is-gdpr/
19. https://oag.ca.gov/privacy/ccpa
20. https://web-archive.oecd.org/2020-05-19/553489-2020-03-31_Final_report_homing%20flight%20test_honeybees_%202016_2017vf.pdf
21. https://groww.in/blog/current-market-condition-sectors-future
22. https://groww.in/blog/current-market-condition-sectors-future
23. https://groww.in/blog/current-market-condition-sectors-future
24. https://groww.in/blog/current-market-condition-sectors-future
25. https://groww.in/blog/current-market-condition-sectors-future
26. https://idronline.org/article/health/evolution-of-ayushman-bharat-as-indias-healthcare-initiative/?
27. https://groww.in/blog/current-market-condition-sectors-future
28. https://groww.in/blog/current-market-condition-sectors-future
29. https://pmaymis.gov.in/
30. https://maharera.maharashtra.gov.in/
31. https://www.makeinindia.com/
32. https://www.mofpi.gov.in/sites/default/files/draft-nfpp_0.pdf
33. https://groww.in/blog/current-market-condition-sectors-future
34. https://heavyindustries.gov.in/fame-ii
35. https://mnre.gov.in/production-linked-incentive-pli/
36. https://www.revolentgroup.com/services/train-your-team/salesforce/