Enterprise Value
The value of the whole business regardless of how it is financed, equal to market capitalisation plus net debt.
Formula
Enterprise Value = Market Capitalisation + Total Debt - Cash and Cash Equivalents + Non-Controlling Interests
Unit
₹ crore
In depth
Enterprise value answers what it would cost to buy the entire business and settle its debts, which is why acquirers think in these terms rather than in market capitalisation. It makes companies with different capital structures comparable: two identical businesses, one debt-free and one leveraged, have very different market capitalisations and similar enterprise values. Cash is subtracted because an acquirer effectively gets it back, though restricted cash should not be netted off. Comparing one company's EV multiple against another's equity multiple is a frequent and serious error.
Worked example
Market capitalisation ₹1,800 crore, debt ₹500 crore, cash ₹100 crore. Enterprise value = 1,800 + 500 - 100 = ₹2,200 crore. The equity costs ₹1,800 crore; controlling the business costs ₹2,200 crore.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Enterprise Value” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.