Enterprise Value (EV) is the total value of a business, encompassing both its equity and its debt obligations (minus cash, which would reduce the effective acquisition price).
EV = Market Cap + Total Debt + Minority Interest − Cash & Equivalents
EV represents what it would cost to acquire the entire company — paying off equity holders at market cap and assuming all debt obligations, but pocketing the existing cash.
Why EV > Market Cap for capital-intensive companies
Two companies with identical ₹500 crore market caps may look the same, but if one carries ₹300 crore of debt and the other has none, they are very different propositions for a buyer. EV captures this.
EV/EBITDA multiple
The most common EV-based valuation multiple: EV ÷ EBITDA. This normalises for financing and lets you compare companies across different capital structures.
Why it matters for unlisted shares
When evaluating an unlisted company, compute EV (not just market cap) to understand the true valuation, especially if the company has debt. An unlisted company trading at 10× EBITDA may look cheap, but at 4× debt it may not be.
Example: An unlisted logistics company had ₹800 crore market cap + ₹200 crore debt − ₹50 crore cash = ₹950 crore EV, trading at 8× EBITDA.