Market cap vs share price on PSX: which one matters
Market cap is shares times price. Why a Rs 5 stock can be a bigger company than a Rs 500 one, free float vs total, and how it drives index weights and P/E.
Market capitalisation is the share price multiplied by the number of shares in issue: the market’s price for the whole company rather than for one slice of it. A Rs 5 share with 10 billion shares in issue is a Rs 50 billion company; a Rs 500 share with 50 million shares in issue is a Rs 25 billion company. The “cheap” stock is twice the size of the “expensive” one. Share price on its own tells you the size of a slice; it says nothing about how many slices there are. On PSX, where a Rs 10 face-value convention and decades of bonus issues have produced share counts ranging from a few million to several billion, the spread of prices is enormous and almost meaningless as a measure of size, value or cheapness.
The formula, with illustrative numbers
The three companies below are invented to make the arithmetic clear; they are not real PSX listings.
| Company (illustrative) | Share price | Shares in issue | Market cap |
|---|---|---|---|
| Alpha Cement | Rs 5 | 10,000 million | Rs 50,000 million (Rs 50 billion) |
| Beta Foods | Rs 500 | 50 million | Rs 25,000 million (Rs 25 billion) |
| Gamma Bank | Rs 40 | 2,000 million | Rs 80,000 million (Rs 80 billion) |
Ranked by price, Beta is the “biggest” and Alpha the “smallest”. Ranked by market cap, Gamma is the largest, Alpha is second and Beta is last. The price ranking and the size ranking are almost exact opposites, and it is the size ranking that matters for index weights, for valuation ratios and for understanding what you actually own.
Owning 1,000 shares of Alpha (Rs 5,000) and 10 shares of Beta (Rs 5,000) is the same rupee exposure. The share count is different because the slices are different sizes.
Why PSX share prices are so scattered
Three habits of the Pakistani market push prices apart.
The Rs 10 face value. Most companies issued their shares at a Rs 10 par value, and dividends are still announced as a percentage of it, as PSX dividends explained covers. A company that listed at Rs 10 decades ago and compounded its earnings can trade at Rs 1,000 or more per share today without ever changing its share count.
Bonus issues. Many PSX companies reward shareholders with bonus shares rather than, or as well as, cash. A 50% bonus gives you one new share for every two held; the company is worth the same, so the price per share falls by a third. Do that repeatedly over twenty years and a company can end up with billions of shares trading at a low price while being one of the largest businesses in the country.
Few stock splits. In some markets a company with a high share price splits it to make round lots affordable. Splits are uncommon on PSX, so high prices persist.
The result is visible in the KSE-100. On Equivest’s snapshot of 11 September 2026, Bank Alfalah traded at about Rs 55 and Attock Refinery at about Rs 1,095, roughly twenty times the price. Yet Bank Alfalah’s tradable shares were worth about Rs 78 billion and Attock Refinery’s about Rs 47 billion. The bank had around 1.4 billion shares in its free float; the refinery around 43 million. The cheaper share belonged to the larger tradable company, and it carried a higher index weight.
Free float vs total market cap
Total market cap counts every share in issue, including those that never trade. Free float is the subset available to the public: PSX excludes shares held by sponsors and directors, by government, by associated companies and strategic investors, and any shares that are locked in. Free-float market cap is that share count multiplied by price.
Return to the illustrative Gamma Bank. If the government owns 75% of its 2,000 million shares, only 500 million are in the float. Its total market cap is Rs 80 billion, but its free-float market cap is Rs 20 billion. Both numbers are true; they answer different questions. Total cap says how big the business is. Free-float cap says how big the investable slice is, which is why PSX indices use it.
Free float also hints at liquidity. A company with a tiny float can see its price move sharply on small volumes, because there are few shares available to absorb a large order. Two companies with the same total market cap can behave very differently if one has 80% of its shares locked with a sponsor.
How market cap feeds index weights
The KSE-100, KSE-30 and KMI-30 all weight their members by free-float market cap. Each company’s weight is its free-float cap divided by the sum of the free-float caps of all members. That is why a low-priced bank can outweigh a high-priced refinery, and why ten companies can carry half of the index; KSE-100 heavyweights lists the current top fifteen and works through the arithmetic with real figures.
Because weight is price times float, it changes every day. A stock whose price rises 20% while the rest of the market is flat gains a proportionally larger weight without any change to the index membership. The live weights are on the KSE-100 constituents page, and the KSE-100 hub shows the index they add up to.
How market cap feeds P/E
The price-to-earnings ratio is share price divided by earnings per share. It is also, and equivalently, market cap divided by net profit, because both the numerator and the denominator are simply multiplied by the share count. Thinking of it the second way makes the “cheap stock” illusion disappear.
Suppose Alpha Cement earned Rs 5 billion last year and Beta Foods earned Rs 1 billion. Alpha’s P/E is Rs 50 billion divided by Rs 5 billion, which is 10. Beta’s is Rs 25 billion divided by Rs 1 billion, which is 25. The Rs 5 share is on a lower multiple of profits than the Rs 500 share, even though its price is a hundred times smaller. Reverse the profits and the conclusion reverses. The share price entered the calculation only as part of market cap; on its own it told us nothing.
Dividend yield works the same way: total dividends paid divided by market cap gives the same answer as dividend per share divided by price. Whether you use per-share or whole-company figures, the price only matters relative to what the company earns or pays out.
Three things price alone cannot tell you
Size. As above. A Rs 3 share might be one of ten billion in a large utility or one of ten million in a tiny shell company. The stock page shows shares in issue and market cap next to the price for exactly this reason.
Value. A Rs 3,000 share can be on a P/E of 8 and a Rs 8 share on a P/E of 40. “Cheap” and “expensive” are statements about price relative to earnings, assets or dividends, never about the price by itself.
Affordability of a position, not of the company. A high share price makes a single share cost more, which matters if you are investing a few thousand rupees at a time, but that is a constraint on lot sizes, not a statement about the business. A Sahulat or small account can hold a Rs 1,100 stock; it simply holds fewer shares of it.
The common trap is the “penny stock” instinct: the feeling that a Rs 4 share has more room to rise because it is “low”. It has room to rise only if the company grows or is revalued, and that is true of a Rs 4,000 share in exactly the same way.
Where to see it on Equivest
Every stock page shows market cap, shares outstanding and free float alongside the price, together with the PSX indices the company belongs to. The KSE-100 hub and its constituents page rank the members by that weight rather than by price. In the portfolio tracker, positions are valued in rupees, which is the only figure that lets a Rs 5 holding and a Rs 500 holding be compared honestly.
Education, not investment advice.