What is market capitalisation?

Market capitalisation (market cap) is the total value the stock market puts on a company. It's the simplest size measure there is — and it quietly shapes how risky a stock tends to be.

The formula

Market cap = Share price × Total number of shares

A company with 10 crore shares trading at ₹500 has a market cap of ₹5,000 crore. Note what this means: market cap moves with the share price every second. It is not how much cash the company has or how much it earns — just what investors collectively think it's worth right now.

Large, mid and small cap (the SEBI definitions)

In India, SEBI ranks all listed companies by market cap and draws clear lines:

• Large-cap: the top 100 companies. Big, established, widely tracked, generally less volatile.
• Mid-cap: ranks 101–250. Faster growth potential, bumpier ride.
• Small-cap: rank 251 onward. The highest growth potential and the highest risk — thin liquidity and sharp swings.

Why the label matters

• Risk and volatility rise as you go down the ladder. Small-caps can double — or halve — far faster than large-caps.
• Liquidity falls. It's easy to buy and sell a large-cap; a small-cap can be hard to exit in a hurry.
• Information thins out. Large-caps are covered by dozens of analysts; small-caps you often have to research yourself.

A useful mental model

Bigger isn't "better" — it's a different trade-off. Large-caps offer stability and slower compounding; small- and mid-caps offer higher potential return for materially higher risk. Many of the company stories we cover started as small-caps and grew up. Knowing a company's cap is the first thing to check before you judge its price or its P/E.