6.10What is Book Value Per Share?
1What is it?
Book Value Per Share (BVPS) is the company’s net worth divided by the number of shares.
2Why does it exist?
It gives a per-share "accounting floor" used in the P/B ratio, and growth in BVPS over years shows wealth building inside the company.
3Diagram
High value means…
More net assets per share.
Low value means…
Fewer net assets per share (normal for asset-light businesses).
Is high or low good?
Growing BVPS over time is good. Compare with price via P/B.
4Calculation
BVPS = (Total assets − Total liabilities) ÷ Shares outstanding
- Equity = ₹12,000 cr; shares = 200 cr.
- BVPS = ₹60.
Each share is backed by ₹60 of accounting net worth.
5Risks
- Accounting values may not match real-world values.
- Less meaningful for brand- or tech-driven companies.
6Practical use
Always compare a ratio with (1) the company’s own history and (2) other companies in the same industry. A single number on its own means little.
7Quick revision
- BVPS = equity ÷ shares.
- Used in P/B.
- Watch it grow over years.
8Knowledge check
Q1. Equity ₹900 cr, shares 30 cr. BVPS?Show answer
₹30.
Q2. Does BVPS equal the share price?Show answer
No. Price is set by the market.
Q3. What does steadily rising BVPS show?Show answer
The company is retaining and growing net worth.
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