Learnings · Valuation
Enterprise value
and the EV bridge
Equity value is what the shares are worth. Enterprise value is what the business is worth to everyone who funds it. The bridge between them, worked on listed Indian companies at the last close.
The question
What is the difference between enterprise value and equity value, and how do you go from one to the other?
The answer in sixty seconds
Equity value is what the shares are worth. For a listed company that is the share price times the shares outstanding: its market cap. Enterprise value is what the operating business is worth to everyone who funds it, lenders as well as shareholders.
To go from equity value to enterprise value, add debt, lease liabilities included, take away cash and liquid investments, and add minority interest and any preference shares. A buyer of the whole business takes on its debt and gets its cash. Minority interest goes in because the accounts include all of a subsidiary’s EBITDA, so the slice the company does not own has to be counted too if EV/EBITDA is to compare like with like.
Enterprise value = market cap
+ debt (including lease liabilities)
− cash and short-term investments
+ minority interest (+ preference shares)
Worked on live numbers
Bridges at the last close
Tata Consultancy Services holds more cash than debt, so its enterprise value is below its market value.
UltraTech Cement borrows to build plants, so net debt adds to its enterprise value.
Bharti Airtel carries large debt and lease liabilities, and minority shareholders in its subsidiaries.
| Rs crore | Tata Consultancy Services | UltraTech Cement | Bharti Airtel |
|---|---|---|---|
| Market cap | ₹9,15,376 cr | ₹3,24,941 cr | ₹11,80,417 cr |
| + Borrowings | + ₹0 cr | + ₹22,781 cr | + ₹1,21,671 cr |
| + Lease liabilities | + ₹11,283 cr | + ₹974 cr | + ₹73,740 cr |
| − Cash and short-term investments | − ₹41,373 cr | − ₹5,234 cr | − ₹50,198 cr |
| + Minority interest | + ₹1,238 cr | + ₹4,089 cr | + ₹46,907 cr |
| Enterprise value | ₹8,86,524 cr | ₹3,47,552 cr | ₹13,72,537 cr |
| Net debt (debt less cash) | −₹30,090 cr | ₹18,521 cr | ₹1,45,214 cr |
| EV against market cap | 97% | 107% | 116% |
Statements: consolidated, for the year to 31 Mar 2026, as Yahoo Finance carries them, in Rs crore. Prices and market caps: NSE closes of 23 Oct 2026 via Yahoo Finance. Balance-sheet figures are at the year end while the market cap is today's, the usual mismatch in any quick EV.
Debt is total borrowings plus lease liabilities, as Yahoo reports them; lease liabilities are shown on their own line. Cash includes short-term investments. Some analysts keep back a slice of cash the business needs to run; this bridge takes it all off.
Follow-ups
What they ask next
Why do you subtract cash?
Cash the business does not need to operate is worth exactly its face value, and a buyer could use it to pay part of the price. Taking it off leaves the value of the operations alone. Cash the business needs day to day is arguably operating, and some analysts leave that part in.
A company borrows 100 and keeps the cash. What happens to EV and to equity value?
Neither changes. Debt goes up 100 and cash goes up 100, so they cancel in the bridge, and nothing has happened to the business itself.
It pays a dividend of 100. What happens?
Equity value falls by about 100, since that cash has left the company. Enterprise value does not change: the business is the same, and the lower cash is offset by the lower market cap.
Why don’t you use EV for a bank?
For a bank, deposits and borrowings are raw material, not financing: it earns its living on them. Taking debt out of the value makes no sense. Banks are valued on equity measures, P/B and P/E.
Which multiples go with EV and which with equity value?
The top and bottom must belong to the same people. EV goes with figures before interest, which serve lenders and shareholders alike: EBITDA, EBIT, sales. Equity value goes with figures after interest: net profit for P/E, book value for P/B.
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