Book Value Per Share
Book Value Per Share is the net asset value of a company allocated to each equity share, calculated by dividing total shareholders' equity by the number of outstanding shares.
Book value per share gives investors a balance-sheet-grounded measure of intrinsic value — what each share would theoretically be worth if the company were liquidated at accounting values. It forms the denominator in the P/B ratio and is a key reference point in value investing frameworks.
For Indian banking stocks, book value per share is particularly meaningful because banks' assets (loans, investments) and liabilities (deposits, borrowings) are both financial in nature and can be assessed at near-market values. When HDFC Bank's book value per share grew from approximately ₹100 in 2010 to over ₹650 by 2023 through retained earnings, it illustrated how compounding return on equity over time builds per-share book value — and typically, share price follows.
A growing book value per share over time is a healthy sign, indicating that the business is retaining and compounding its earnings. When book value per share stagnates or declines, it typically means either large losses are being reported, goodwill or asset impairments are destroying equity, or an aggressive buyback programme is reducing the share count (and thus equity) faster than profits are being added.
Retail investors should be aware that book value per share under Indian GAAP (pre-Ind AS) and under Ind AS can differ significantly. The transition to Ind AS from 2016–2017 required many companies to revalue assets, restate deferred taxes, and reclassify items, all of which changed reported equity. Comparing book value per share numbers across a pre-/post-Ind AS boundary requires caution.
Intangible assets and goodwill deserve special attention when interpreting book value. If a company has grown through acquisitions and carries large goodwill on its balance sheet, the 'tangible book value per share' — computed after excluding goodwill and other intangibles — is a more conservative benchmark. A stock trading at a high multiple of tangible book value but a low multiple of total book value is essentially being valued largely on goodwill and intangibles, the robustness of which must be independently assessed.