Classifications such as large-cap, mid-cap and small-cap are only approximations and may change over time. It is based on Market capitalization of the company. Market capitalization of the company is defined as:
Market Capitalization = Share Price X Number of shares outstanding
Small cap is a term used to classify companies with a relatively small market capitalization. A company’s market capitalization is the market value of its outstanding shares. In US, the company is classified as small cap if its market capitalization is less than $2 billion and in India, normally a company below market capitalization of Rs.5000 crores is classified as small cap company.
A mid-cap company is a company with a market capitalization between $2 billion and $10 billion in US. In India, normally a company with market capitalization above Rs.5000 crores and less than Rs.20000 crores is considered as midcap company. As the name implies, a mid-cap company falls in the middle of the pack between large-cap and small-cap companies.
Large cap (sometimes “big cap”) refers to a company with a market capitalization value of more than $10 billion. Large cap is a shortened version of the term “large market capitalization.” In India, normally companies with the market capitalization higher than Rs.20,000 crores is considered as Large cap companies.
The amount used for the classifications “large cap,” mid cap” or “small cap” are only approximations that change over time.