Market value vs. market capitalization
Market value of a company is interchangeably used with market capitalization, but they are two separate concepts.
Market value is a reflection of a company’s financial position. It is a dynamic measure that depends on several fundamental and technical factors.
On the other hand, market capitalization can simply be estimated by multiplying the number of outstanding shares with the current share price. It is an exact measure of a company’s worth and is computed by the following formula:
Market cap = No. of outstanding shares X current share price
For example, in 1993, when Infosys was first listed on Indian markets, it opened to a price of Rs. 145, commanding a meagre market cap. But recently, it touched a market cap of Rs. 7.45 lakh cr., riding on its stock price hitting a record high of Rs. 1,755.
Nevertheless, markets remain filled with uncertainties. A company could be hit with bad results or face the entry of a new competitor. All of this impacts the perception of the company i.e, its market value. However, its market cap is technically dependent only on how its share fairs in the market.
