Top 10 Companies of Nepal by Market Capitalization

Market Capitalization is the number of shares outstanding multiplied by the current share price. It tells you the value of the company's stock in the share market. Normally, the market cap lets you compare similar businesses. 

Looking at the Standard & Poor's (S&P) index as of 17th March 2021, they have divided market caps into 

• Small-Cap (S&P SmallCap 600): $750 million to $3.3 billion
• Mid Cap (S&P MidCap 400): $3.3 billion to $11.8 billion
• Large Cap (S&P 500): $11.8 billion or more

What does market cap tell us?

Large Cap: These are matured companies and major players in their sector. There might not be exponential growth in the short period but in long run, however, provide a consistent increase in share value and dividend payments.

Mid Cap: These are established companies that are supposed to have rapid growth. Most of the mid-companies are in the process of expansion and can offer better returns in both the short-term & long-term. But, inherently they carry more risk than large-cap companies.

Small-Cap: These are young companies with niche markets. These companies are supposed to be more sensitive to economic slowdowns as obviously being small has fewer resources. However, they are in need of cash and have a high potential to offer bonus share, right share and even, FPO (further public offerings).

What sort of Investment Strategy should one take based on the market cap?

People try to diversify their portfolio by having shares representing different market cap such that they can balance the risk and also, take care of opportunities in the market.

What about Nepal?

NEPSE market capitalization as of 9th September 2021 is NRs. 4,043,189.75 million. However, during our research, we couldn't find any standard ceiling to differentiate different market cap groups. The number of listed companies and the industry they represent is pretty limited. It actually limits the ability to utilize the general investment strategy based on the market cap as detailed in the above paragraph. 

However, it does give an indication as to bigger players in the market and their risk absorbing capacity in case of gloomy days. It is generally considered safe to have invest

Here are the top 10 companies of Nepal by market capitalization.

From the above table, you can see that these 10 companies represent a total of 30% of the market which is pretty significant. There are 4 commercial banks on the list with NABIL on the top, followed by Nepal Telecom and Nepal Reinsurance Company.

Note: The data has been picked up as of 9th September 2021 so there might have been few changes by the time this blog was published.