NAV, and the discount that usually appears

An investment company's value is mostly the value of what it owns. That makes it one of the few businesses where a fairly precise asset value can be calculated.

• NAV = Total assets − Total liabilities
• NAV per share = NAV ÷ Shares outstanding
• Premium / discount = (Market price − NAV per share) ÷ NAV per share × 100

Worked — Illustrative Example

Portfolio of listed holdings Rs 4,20,00,00,000; unlisted holdings Rs 90,00,00,000; cash Rs 15,00,00,000; liabilities Rs 25,00,00,000. Shares 4,00,00,000.

• NAV = 420 + 90 + 15 − 25 = Rs 500 crore
• NAV per share = 500 crore ÷ 4 crore shares = Rs 125
• At a market price of Rs 100: discount = (100 − 125) ÷ 125 × 100 = −20%