Unlisted Shares, Valuation of

Unlisted Shares, Valuation of The Reserve Bank of India , following the guidelines set by the CCI in 1990, has provided two alternative formulas for the calculation of a fair price for unlisted shares, as well as shares not traded for more than six months.

  • Net asset value method of calculation of the book value : Net worth divided by the total number of shares issued. Let us assume that the net worth of the company is Rs. 2 crore or Rs. 20,000,000 and the number of shares issued is 8,00,000. Then the book value per share is Rs. 25.
  • Fair price based on the capitalization of average profits for the last three years : Let us assume that the average profits for the last three years is RS. 44,00,000. The rate of capitalization is taken to be 20% – the current yield on the company’s debenture (the yield on debentures of unlisted companies tends to be on the high side). A fair price then would be average profit multiplied by 100, divided by the current yield per debenture: the product then divided by the number of shares issued. Or
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