How is valuation calculated?
What decides the number, and what you control.
Investors usually compare a profitable company with similar listed companies. They look at how many times its yearly profit the market pays for those companies. This is the price to earnings, or P/E, multiple. Some use operating profit instead (EV to EBITDA). That figure is then weighed against the company's own growth, margins, return on capital and risks.
The method is the same for everyone. What goes into it is not: how steady, how protected from competitors and how easy to grow the business looks, and how well each of those is shown.
More on Valuation
- Who actually decides my valuation?
- Why did a similar company get a different valuation from mine?
- What if I believe my company is worth Rs 500 crore and someone says Rs 300 crore?
- How reliable is an early estimate of valuation?
- Why might an outsider value my company lower than I do?
- Why do key numbers matter so much?
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General information, not legal or investment advice. Rules as at 2 November 2026.
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