Market capitalization means total market value of the company. This means it’s the amount that you have to pay if you want to buy all the shares of the company at the present price. It’s an indicator of public opinion on company’s net worth.
Its measured as the total value street assigns to a company by multiplying current stock price by the total number of shares outstanding.
Market capitalization of companies changes constantly based on the ups and downs of the stock price. It’s also referred to as “Market Cap”.
Do not get it confused with the book value of the company, it’s different. Book value is measured from the company’s balance sheet. Its calculated to know company’s actual net worth as per books.
Here is the formula to calculate market cap;
Number of shares outstanding * current price per share
If a company has 10 million shares outstanding with a current price per share of Rs 200, then market cap will be calculated to Rs 2 billion. This means anyone can buy that company for Rs 2 billion if all the shareholders are willing to sell their shares.
How stock is divided based on its market capitalization
Based on company’s market capitalization, stock can fall into following three categories;
- Large cap,
- Mid cap, and
- Small cap
Stock companies with market cap of Rs 10,000 crore or more are classified as large cap. These companies are stable, less risky to invest as size is very big, and can handle any economic downturn.
Size of the company makes them more likely to withstand slowdown without going out of business altogether. Conservative investors prefer large cap as they pay dividends.
Due to this reason, many investors turn to large cap stocks
Mid cap and small cap
Stock with a market capital of Rs 2,000 crore to Rs 10,000 crore is considered as mid cap and below Rs 2,000 crore are known as small cap.
These are small companies and most of them would have listed recently in stock exchanges. Many investors take interest in these companies as they have plenty of opportunities to grow their business.
Large companies may not grow as fast as small companies. However, these companies are more likely to go out of business in economic downturn.
Growth of these companies will be stable in the expansion phase of business cycle if interest rate is not high and capital is cheap. History shows that small companies outperform large caps during the expansion phase of business cycle.
In USA, companies with market capitalization of $ 10 billion or more is considered as large cap. Mid cap companies are businesses with market capitalization of $2 billion to $10 billion. Similarly small cap companies are those with a market capitalization of $300 million to $2 billion.
Here are the top 70 companies listed on BSE based on their market cap as on 13.05.2019.
|Security Name||Close Price||Market Capitalization (Cr.)|
|TATA CONSULTANCY SERVICES LTD.||2,131||7,99,671|
|RELIANCE INDUSTRIES LTD.||1,231||7,80,225|
|HDFC Bank Ltd||2,289||6,23,872|
|HINDUSTAN UNILEVER LTD.||1,702||3,68,379|
|HOUSING DEVELOPMENT FINANCE CORP.LTD.||1,952||3,35,973|
|STATE BANK OF INDIA||307||2,73,762|
|KOTAK MAHINDRA BANK LTD.||1,390||2,65,319|
|ICICI BANK LTD.||376||2,42,567|
|OIL AND NATURAL GAS CORPORATION LTD.||164||2,10,593|
|MARUTI SUZUKI INDIA LTD.||6,525||1,97,116|
|AXIS BANK LTD.||732||1,88,393|
|LARSEN & TOUBRO LTD.||1,317||1,84,768|
|Bajaj Finance Limited||2,929||1,69,250|
|BHARTI AIRTEL LTD.||319||1,63,448|
|COAL INDIA LTD.||242||1,50,281|
|HCL TECHNOLOGIES LTD.||1,083||1,46,858|
|INDIAN OIL CORPORATION LTD.||143||1,38,733|
|ASIAN PAINTS LTD.||1,333||1,27,851|
|ULTRATECH CEMENT LTD.||4,342||1,19,258|
|BAJAJ FINSERV LTD.||7,347||1,16,908|
|HINDUSTAN ZINC LTD.||257||1,08,717|
|Titan Company Limited||1,144||1,01,541|
|NESTLE INDIA LTD.||10,317||99,468|
|POWER GRID CORPORATION OF INDIA LTD.||182||95,450|
|SUN PHARMACEUTICAL INDUSTRIES LTD.||397||95,215|
|BAJAJ AUTO LTD.||2,972||86,013|
|INDUSIND BANK LTD.||1,395||84,077|
|HDFC Life Insurance Company Ltd||403||81,220|
|TECH MAHINDRA LTD.||815||78,555|
|Avenue Supermarts Ltd||1,253||78,223|
|BHARAT PETROLEUM CORPORATION LTD.||355||77,008|
|MAHINDRA & MAHINDRA LTD.||619||76,904|
|ADANI PORTS AND SPECIAL ECONOMIC ZONE LTD.||364||75,414|
|GAIL (INDIA) LTD.||332||74,835|
|JSW STEEL LTD.||277||66,969|
|Bandhan Bank Ltd||553||66,020|
|SHREE CEMENT LTD.||18,816||65,551|
|GODREJ CONSUMER PRODUCTS LTD.||638||65,224|
|BRITANNIA INDUSTRIES LTD.||2,678||64,362|
|DABUR INDIA LTD.||363||64,143|
|SBI Life Insurance Company Ltd||623||62,340|
|InterGlobe Aviation Ltd||1,555||59,777|
|PIDILITE INDUSTRIES LTD.||1,153||58,545|
|GRASIM INDUSTRIES LTD.||838||55,107|
|TATA STEEL LTD.||472||54,041|
|TATA MOTORS LTD.||180||52,044|
|EICHER MOTORS LTD.||18,766||51,199|
|HERO MOTOCORP LTD.||2,510||50,129|
|BHARTI INFRATEL LTD.||266||49,153|
|ICICI Lombard General Insurance Company Ltd||1,077||48,911|
|ICICI Prudential Life Insurance Company Ltd||337||48,350|
|DR.REDDY’S LABORATORIES LTD.||2,805||46,564|
|HAVELLS INDIA LTD.||732||45,791|
|HINDALCO INDUSTRIES LTD.||192||43,194|
|DIVI’S LABORATORIES LTD.||1,623||43,095|
|AUROBINDO PHARMA LTD.||717||42,028|
|AMBUJA CEMENTS LTD.||210||41,738|
|Vodafone Idea Ltd||14||41,523|
|General Insurance Corporation of India||229||40,158|
|HINDUSTAN PETROLEUM CORPORATION LTD.||263||40,038|
|PIRAMAL ENTERPRISES LTD.||2117.25||39171.81|
Above lists are not recommendation of stocks or even doesn’t guarantee that these are safe investments. We suggest you to consult a good financial advisor before taking your investment decisions.
There are several other ways to value a company from investing point of view. Here are certain financial tools to help you;