Many people judge the size of a company by simply looking at its share price. They assume that a company with a higher share price is generally a bigger company as compared to a company with a lower share price.
Below are the share price of two companies, one is the leading private sector bank in the country and the other is a giant in the automobile sector.
HDFC Bank – 2245 Rs
MRF – 58,000 Rs

If you are under the impression that because MRF has a way bigger share price as compared to HDFC bank, it might be a bigger company, then you need to read about market capitalisation.

Market Capitalisation refers to the total market value of a company’s outstanding shares. Outstanding shares refers to the shares owned by the public at large, foreign and domestic investors excluding the shares held by the promoters (owners) of the company. Market capitalisation is calculated by multiplying the outstanding shares with the current market price of the share.
Let us take an example:
A company named XYZ LTD, has
Total number of outstanding shares – 2,00,000
Current price of share -200 Rs
Market capitalization – 2,00,000 * 200 = 40 Crores
The Market capitalisation of XYZ Ltd is 40 crores

Coming back to our original question, is HDFC bank bigger of MRF?
Let’s calculate the market capitalisation of both these companies

Outstanding Shares2,732,812,27142,41,143

From the above table you can observe that Market capitalisation of HDFC Bank is 15 times more than MRF, which makes it a bigger company. Although MRF has a bigger share price it is a smaller company as compared to HDFC bank.
You can check the total number of outstanding shares of any company on various websites or simply do a google search.
NOTE: As share price keeps on changing, market capitalisation keeps on changing and is never constant.