What is the Market Cap of a company ?
What is Market Capitalization ?
Market Cap or Market Capitalization of a company represents Price tag of the company. It tells you how much money you would need to pay to acquire all the shares of the company.
Type of Market Capitalization
The stock market can be divided into various categories depending on the market capitalization of the company:
1- Nano cap stocks
Nanocaps are companies which have their market capitalization below INR 500 Cr. As in Jan 2024, their examples include Kore Digital (market cap = INR 270 Cr), Vinsys IT (INR 410 Cr), Exhicon (INR 490 Cr), etc.
2- Micro Cap Stocks
Microcaps are companies where the market capitalization is between INR 500 Cr and INR 2,000 Cr. As in Jan 2024, their examples include Phantom (market cap = INR 610 Cr), Salzer Electronics (INR 770 Cr), HPL Electric (INR 1,820 Cr), etc.
3- Small caps stocks
Smallcaps are companies where the market capitalization is between INR 2,000 Cr and INR 5,000 Cr. As in Jan 2024, their examples include Balu Forge (market cap = INR 2,740 Cr), Avantel (INR 2,880 Cr), Gensol (INR 3,120 Cr), etc.
4- Mid Cap Stocks
Midcaps are companies where the market capitalization is the range of INR 5,000 Cr to INR 20,000 Cr. As in Jan 2024, their examples include Zen Technologies (market cap = INR 6,450 Cr), Gravita India (INR 7,100 Cr), Titagarh Rail Systems (INR 14,500 Cr), etc.
5- Large Cap Stocks
Largecaps are companies which have their market capitalization above INR 20,000 Cr. As in Jan 2024, their examples include companies like HDFC Bank (market cap = INR 12.7L Cr), TCS (INR 14.1L Cr), Reliance Industries (INR 18.7L Cr), etc.
Market Capitalization Calculator
The formula for calculating the market cap of a company equals to current price of each share of the company multiplied by Total number of shares. In simple terms it tells you how much the company is worth by the markets right now.
Let's See Market Capitalization Example
Interestingly, as companies get bigger, they migrate from one section of the categorization to another. For example, KPI Green Energy top green energy stocks in india migrated from being a smallcap with a market cap of INR 3,000 Cr in Aug 2023 to being a midcap with a market cap of INR 5,600 Cr in Jan 2024.
Similarly, Advait migrated from being a nanocap with a market cap of INR 290 Cr in Feb 2023 to a microcap with a market cap of INR 750 Cr in Jan 2024. This would work the other way round as well, where say a largecap can become a midcap, if its fundamentals deteriorate.
While the smaller companies may still have to prove their mettle, which underlines the inherent risk in such segments, if one puts sufficient efforts to study these companies, the returns one can make could be life-changing. For example, INR 2L invested in Waaree Renewables in Jan 2021 when the share price was INR 25/share, turned into INR 2 Cr over the next 3 years in Jan 2024, when share price went to INR 2,500/share. Similarly, INR 2L invested in RMC in Jan 2021 when the share price was INR 12/share, turned into INR 1 Cr over the next 3 years in Jan 2024, when share price went to INR 600/share. It is also worth noting that a lot of HNI investors have created generational wealth through micro cap stocks with huge growth potential / nanocap investing.