Three terms come up constantly in NEPSE Viber groups and broker conversations: book close, book value, and BPS. They sound like accounting jargon. They're not. Each one answers a simple question, and once you know which question, the rest is arithmetic.
Book Close
What it means
Book Close is a date set by a company. If you own shares of that company on or before the book close date, you're eligible to receive dividends, bonus shares, or rights shares that the company announces.
Think of it as a deadline — the company is "closing its books" to figure out who the current shareholders are.
How it works
- A company announces a dividend (let's say 20% cash dividend)
- It also announces a book close date (e.g., Baisakh 15)
- If you own shares before Baisakh 15, you get the dividend
- If you buy shares after Baisakh 15, you don't get that dividend
Why it matters for trading
Right before book close, share prices often rise because buyers want to capture the dividend. After book close, prices typically drop by roughly the dividend amount (this is called the stock going ex-dividend).
Beginner tip: Don't buy a stock just because a dividend is coming. The price adjustment after book close usually cancels out the "free" dividend. You're not getting something for nothing.
Book Value
What it means
Book Value is what the company's net assets are worth according to its balance sheet — essentially, total assets minus total liabilities.
It represents the "accounting value" of the company — what would be left if the company sold everything and paid off all debts.
Book Value per Share (BPS)
More useful than total book value is Book Value per Share (BPS):
How to use BPS
| Situation | What it suggests |
|---|---|
| Share Price > BPS | Market values the company above its accounting worth — expects future growth |
| Share Price ≈ BPS | Market thinks the company is fairly valued at its asset worth |
| Share Price < BPS | Stock might be undervalued — or the market doubts the asset quality |
Example: If a company's BPS is Rs. 200 and its share price is Rs. 150, it's trading below book value. This could be a bargain — or it could mean the market knows something about the company's assets that the balance sheet doesn't reveal.
BPS in NEPSE context
For banks and financial institutions in Nepal, BPS is particularly important because:
- Their assets (loans) and liabilities (deposits) are well-defined
- Banking regulations require regular disclosure
- BPS tends to grow steadily for well-managed banks
For hydropower companies, BPS can be less reliable because:
- Asset values depend on future power generation, which is uncertain
- Construction-stage companies may have high BPS but no revenue yet
The relationship between these three
These three concepts are interconnected:
- Book Close determines who gets the benefits of ownership
- Book Value / BPS tells you what the company is fundamentally worth
- Price vs BPS tells you how the market feels about that worth
A practical example
Let's say ABC Bank announces:
- 30% bonus shares
- Book close on Jestha 10
- Current BPS: Rs. 250
- Current share price: Rs. 350 (P/B = 1.4x)
What happens:
- Before Jestha 10: Price may rise as buyers chase the bonus
- After Jestha 10: Price adjusts downward (ex-bonus), and your share count increases by 30%
- Your total value: Should be roughly the same — you have more shares at a lower price each
Common mistakes
- Chasing book close dates — Buying just for dividends or bonus shares usually doesn't create real profit after price adjustment
- Assuming BPS = intrinsic value — Book value is an accounting measure, not a market measure. Some assets may be worth more or less than stated
- Ignoring asset quality — A bank with Rs. 300 BPS but lots of bad loans is worth less than a bank with Rs. 250 BPS and clean loans
- Comparing BPS across sectors — Like P/E, BPS norms differ by sector. Don't compare a bank's BPS to a hydropower company's
Quick reference
| Term | Formula | Plain meaning |
|---|---|---|
| Book Close | — | Deadline to own shares for dividend eligibility |
| Book Value | Assets - Liabilities | What the company is worth on paper |
| BPS | Book Value ÷ Total Shares | Per-share accounting value |
| P/B Ratio | Share Price ÷ BPS | How much premium you pay over book value |
The three terms here, plus P/E from the previous article, cover most of the vocabulary you'll need to read a quarterly report or follow a NEPSE discussion without getting lost. Next time someone tells you "yo stock ko book close najik aayo, kinnu parcha" — you'll know exactly what they're claiming, and why it usually isn't a reason to buy.