What is a Mid-Cap Business?
Introduction
A mid-cap business refers to a company with a moderate market capitalization, typically between ₹5,000 crore and ₹20,000 crore in India. These companies fall between small-cap and large-cap businesses and are known for their growth potential and stability.
Understanding Market Capitalization
Market capitalization (market cap) is the total value of a company's outstanding shares. It is calculated as:
Market Cap = Share Price × Total Number of Outstanding Shares
Classification of Companies Based on Market Cap (India)
| Category | Market Capitalization |
|---|---|
| Large-Cap | ₹20,000 crore and above |
| Mid-Cap | ₹5,000 crore to ₹20,000 crore |
| Small-Cap | Below ₹5,000 crore |
Example of a Mid-Cap Business
Suppose a company has:
- Share Price = ₹500
- Total Outstanding Shares = 10 crore
Market Cap = 500 × 10 crore = ₹5,000 crore
Since the valuation is between ₹5,000 crore and ₹20,000 crore, it qualifies as a mid-cap business.
Characteristics of Mid-Cap Companies
✔ Balanced Growth – Faster growth than large caps but more stable than small caps.
✔ Moderate Risk – Less volatile than small-cap stocks, making them attractive for investors.
✔ Potential for Expansion – Many mid-cap companies are in the scaling phase, preparing to become large-cap businesses.
Why Invest in Mid-Cap Businesses?
- Higher Growth Potential compared to large caps.
- Less Risky than small-cap stocks.
- Diversification opportunity in an investment portfolio.
Conclusion
A mid-cap business offers a balance between growth and stability, making it an attractive option for both businesses and investors. These companies have room to expand, making them ideal for long-term investment strategies.