Glossarytaught in M0.02, M3.06
Market capitalisation
Also called market cap, m-cap.
Share price multiplied by the number of shares outstanding. The market's price for the whole equity.
50 crore shares at ₹240 gives a market capitalisation of ₹12,000 crore.
Market capitalisation is a price. A price and a value are different things, and the distinction matters when the free float is small. A company where promoters hold 75% has only a quarter of its shares actually trading, and the price at which that quarter changes hands may not be the price at which the whole could be sold.
Indian index providers use free-float market capitalisation for weighting, for that reason.
For an Indian company, check the share count that produced it. Screeners frequently use a stale count that misses a rights issue, a bonus or a large employee-option exercise, and the error flows into every per-share multiple computed from it. Share capital divided by face value, from the latest balance sheet, is the check.
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