EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortisation. It strips out financing choices (interest), tax policy, and non-cash accounting entries (depreciation, amortisation) to show how much cash a company's core operations generate from revenue after paying operating costs.
How it is calculated
EBITDA = Net Profit + Interest + Taxes + Depreciation + Amortisation
Why it matters for unlisted shares
EBITDA is the most common denominator in private-company valuation. When you hear a company is "valued at 20× EBITDA", the enterprise value equals 20 times annual EBITDA. Comparing the EV/EBITDA multiple against listed peers tells you whether the unlisted price is cheap or expensive.
EBITDA also lets you compare companies with different debt levels or depreciation policies on equal footing — a meaningful adjustment when you are judging an unlisted company whose balance sheet you cannot fully inspect.
Example: A logistics company earns ₹50 crore EBITDA and trades at an EV/EBITDA of 12× in the unlisted market. Similar listed peers trade at 15×, suggesting potential upside at IPO. Related: how to value an unlisted company.