Market capitalisation at the issue price is the total value the market places on a company at the IPO price. It is calculated by multiplying the post-issue number of equity shares by the issue price, or by the cap price of the band when the final price is not yet known. This is the figure that tells you how big the company is being valued at listing, and it is the base for judging whether the IPO is cheap or expensive when compared with listed peers. Because it uses the post-issue share count, the fresh issue shares are included. Analysts also compute the enterprise value, which adds debt and subtracts cash, and then compare it with sales or operating profit. Market capitalisation determines the size class of the company, such as small, mid or large cap, and it affects which funds and indices can buy the stock. After listing, the market cap moves with the share price. IPO Bulletin shows market capitalisation at the cap price in the key numbers of each IPO page, and states the share count used so that readers can verify the calculation from the RHP.
Example: A company will have 12.5 crore shares after the IPO and the cap price is Rs 160. Market cap at the issue price is 12.5 crore x Rs 160 = Rs 2,000 crore.