Volume 2 - Issue 2, March - April 2026

This study examines the relationship between Return on Equity (ROE) and Market Capitalization (MCAP) of Indian listed firms, with the objective of assessing whether profitability significantly influences market valuation. ROE measures how efficiently a firm utilizes shareholders’ equity to generate profits, while market capitalization reflects the market value of a company. The research is based on secondary data collected from financial statements of selected Indian listed companies. Statistical tools such as correlation and regression analysis are used to evaluate the relationship between ROE and market capitalization. The findings indicate a positive but inconsistent relationship between ROE and market capitalization. While firms with higher ROE tend to have higher valuation, other factors such as firm size, market conditions, and risk also influence market capitalization. The study concludes that profitability alone does not determine firm value.

Amisha,"An Empirical Study on the Relationship between Return on Equity and Market Capitalization of Indian Listed Firms" International Journal of Advanced Multidisciplinary Research and Educational Development, V2(2): Page(1302-1310) Mar-Apr 2026. ISSN: 3107-6513. www.ijamred.com. Published by Scientific and Academic Research Publishing.