Market Capitalization Meaning – Market capitalization, often referred to as “market cap,” is an important metric used to measure the size of a company and its impact on the investing world. Market cap is calculated by multiplying the total number of a company’s outstanding shares by its current stock price.
It is a useful tool for investors to determine the size of a company relative to its peers and to assess its potential for growth. Market cap can also be used to gauge the overall health of a company and the potential risks associated with investing in it. By understanding market capitalization, investors can make more informed decisions about their investments.
Table of Content
What is Market Cap?
The Meaning of Market Capitalization – Market capitalization, commonly referred to as ?market cap?, is a measure of a company?s total value and is calculated by multiplying the current stock price by the total number of outstanding shares. It is a key metric used by investors to assess the size and health of a company. Market capitalization can also be used to compare companies of different sizes and to measure the performance of a company?s stock over time.
The market capitalization of a company is an important indicator of its size and liquidity. Companies with higher market capitalizations tend to be more established and have more resources than smaller companies. As a result, they tend to be more stable and less volatile than their smaller counterparts.
Market capitalization is also an important measure of a company?s financial health. Companies with higher market capitalizations tend to be more profitable and have more access to capital. This can make them more attractive investments for investors.
For investors, market capitalization is an important metric to consider when evaluating a potential investment. Companies with higher market capitalizations tend to be more established and have more resources, making them less risky investments. Additionally, companies with higher market capitalizations tend to have more access to capital, making them more attractive investments.
In summary, market capitalization is an important measure of a company?s size and financial health. It is an important metric for investors to consider when evaluating potential investments. Companies with higher market capitalizations tend to be more established and have more resources, making them less risky investments.
Different Types of Market Cap
Types of Market Capitalization Meaning – There are three different types of market capitalization:
- Large-cap,
- Mid-cap,
- Small-cap
Large-cap companies have the highest market capitalization and are usually the most established and well-known companies.
These companies tend to have the most resources and the most stable stock prices.
Mid-cap companies have a lower market capitalization than large-cap companies but are still considered established and well-known.
These companies tend to have more growth potential than large-cap companies. Small-cap companies have the lowest market capitalization and are usually newer and less established companies.
These companies tend to be riskier investments, but they also offer the potential for greater returns.
What is Free Float Market Capitalization?
The Free float Market Capitalization Meaning – Free float market capitalization (FFMC) is a measure of a company’s market capitalization or the total value of its outstanding shares, that excludes any restricted or locked-in shares. This is different from the total market capitalization, which includes all shares, including those held by insiders, employees, and other stakeholders.
Calculating a company’s free float market capitalization is relatively straightforward. To begin, you’ll need to know the total number of outstanding shares and the current market price of the stock. Then, subtract the number of restricted or locked-in shares from the total number of outstanding shares. Finally, multiply the result by the current market price of the stock to get the free float market capitalization.
Example
if a company has 1 million shares outstanding and the current price per share is $10, then the market capitalization of the company would be $10 million. Market capitalization is important because it is used to compare companies of different sizes. For example, a company with a market capitalization of $10 million is much smaller than a company with a market capitalization of $100 million.
Market capitalization is also used to determine the value of a company. A company?s market capitalization is the total value of all of its outstanding shares. This means that if a company has 1 million shares outstanding and the current price per share is $10, then the total value of the company is $10 million.
How to Calculate With Formula
To calculate the market capitalization of a company in India, you must first determine the total number of outstanding shares. This can be done by looking at the company?s financial statements and checking the number of shares issued and outstanding. Once you have this number, you can then multiply it by the current market price per share. This will give you the total market capitalization of the company.
The formula for calculating Market Cap is:
Market Capitalization = Current Market Price per Share x Total Number of Shares Outstanding
Different Types of Market Cap in India
market capitalization meaning in India – In India, market capitalization is used to classify companies into different categories. Companies are classified into large-cap, mid-cap, and small-cap, depending on their market capitalization. Large-cap companies have a market capitalization of Between 20,000 and 1,00,000 crores, mid-cap companies have a market capitalization of between Between 5,000 and 20,000 crores, and small-cap companies have a market capitalization Between 1,000 and 5,000 crores.
| Category | Range (in INR Crores) |
|---|---|
| Mega-cap | Over 1,00,000 |
| Large-cap | Between 20,000 and 1,00,000 |
| Mid-cap | Between 5,000 and 20,000 |
| Small-cap | Between 1,000 and 5,000 |
| Micro-cap | Under 1,000 |
Top Companies on the National Stock Exchange (NSE) in India
| Company Name | Industry | Market Cap (in INR Crores) | |
|---|---|---|---|
| 1 | Reliance Industries | Conglomerate | 18,52,000 |
| 2 | TATA Consultancy Services | Information Technology | 13,11,000 |
| 3 | HDFC Bank | Banking and Finance | 8,55,000 |
| 4 | Infosys | Information Technology | 7,60,000 |
| 5 | Hindustan Unilever | Consumer Goods | 5,20,000 |
| 6 | ICICI Bank | Banking and Finance | 4,91,000 |
| 7 | Kotak Mahindra Bank | Banking and Finance | 3,47,000 |
| 8 | Bharti Airtel | Telecommunications | 3,25,000 |
| 9 | Housing Development Finance Corp | Housing Finance | 2,86,000 |
| 10 | State Bank of India | Banking and Finance | 2,53,000 |
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