Hi All. I saw the news that Nykaa hit 1L marketcap yesterday. That made me wonder how does it get calculated.
I looked it up and found that marketcap is stock price multiplied with the number of outstanding shares.
I looked up definition of outstanding shares and found that these are the ones which are held with the public. This means these aren’t the shares that were held by private investors that invested before the listing. Q1. Is my understanding correct?
Back to the original question, so how do we reach the 1L marketcap? As per the IPO information below( fetched from Nykaa IPO Date, Price, GMP, Review, Analysis & Details), there were 630 crore shares made available to public. Q2. Is this understanding correct? I doubt this is incorrect but since it says each share had face value of 1 rupee then these must be 630 crore shares? If not, then what is this aggregate number?
|Issue Size|[.] Eq Shares of ₹1 (aggregating up to ₹5,351.92 Cr)|| — | — |
|Fresh Issue|[.] Eq Shares of ₹1 (aggregating up to ₹630.00 Cr)|
|Offer for Sale|41,972,660 Eq Shares of ₹1 (aggregating up to ₹4,721.92 Cr)|
Q3. And if these understandings are correct, then the marketcap would be 630 crore multiplied by 2239, which is much more than 1 lac crore.
Please help me make sense of this. Thanks in advance.
No, this is free-float market cap which itself is a subset of the total market cap of a company. Free-float means the shares which are held by individuals and institutions but not the promoter. We don’t expect the promoter to trade on a regular basis so effectively it’s only the free-float which is available to trade.
This is the latest shareholding pattern of NYKAA - Shareholding Pattern (bseindia.com)
The total number of shares outstanding (column 4) is 47.29 crore shares. If you multiply this with the CMP of 2236, it should give you the total market cap of 1.05 lakh crore.
The shares have been issued at a premium to face value. Offer for sale basically means that existing investors have sold shares to the public in the IPO. Fresh issue means that the company has issued new shares which leads to equity dilution for existing shareholders (lesser percentage stake in the company).
About 41.97cr shares have been sold by existing shareholders and rest have been a fresh issue. Fresh issue of 630cr has been done at premium. So, if you divide 630cr by 1125, then it should give you approximate number of new shares issued. The total money raised by the company is 5351.92cr even though the total market cap is in excess of 1 lakh crore.
We must understand that the existing investors must have purchased shares at a much lower price, maybe even in the 10s and they sold at 1125 in the IPO. This is the dream of every VC firm out there.
Thanks a lot for the response Suyash. Makes many things clearer.
The number of new shares introduced still don’t add up though. Fresh issue was 630cr, so 630/1125 is 0.56cr, which is only half crore. And the offer for sale was for ~4.2cr. So the total only comes to 4.7cr. How is it 41.97cr on BSE?
But, it’s 47.29cr on BSE and here we’re getting 0.56cr + 4.197cr, which approximately equals 4.75cr shares. I’m guessing it is something to do with shares of original face value of 10 which were split into 10 shares of face value 1.
Makes many things clearer.