Earnings Per Share (EPS): How to Calculate Basic and Diluted EPS Under Ind AS 33
EPS is the number investors, analysts, and stock markets use to evaluate profitability on a per-share basis — and under Ind AS 33, getting it right is a directly visible compliance matter. This guide covers the basic EPS formula, weighted average shares, bonus issue adjustments, diluted EPS, the treasury stock method for ESOPs, convertible instruments, and SEBI disclosure requirements.
Earnings Per Share (EPS) is one of the most widely tracked metrics in equity analysis. Under Ind AS 33, EPS must be presented on the face of the Statement of Profit and Loss — not just in the notes — making the accuracy of EPS calculation under Ind AS 33 a directly visible compliance matter that regulators, investors, and auditors scrutinise closely. Ind AS 33 is mandatory for all Indian listed companies and companies preparing to list. It is the Indian equivalent of IAS 33 under IFRS, with no significant carve-outs.
This guide walks through both EPS figures required under the standard: basic EPS and diluted EPS, with worked examples, the full comparison table, and SEBI disclosure requirements. If you need specialist advisory on Ind AS implementation or corporate financial advisory, our team handles both. Call us on +91 9819 000 511.
Scope & ApplicabilityWhat Is EPS and Who Must Calculate It Under Ind AS 33?
Ind AS 33 defines EPS as the amount of net profit or loss attributable to each ordinary share of a company. The standard requires two EPS figures to be presented:
- Basic EPS — calculated using the actual number of shares outstanding, weighted for the period they were in issue.
- Diluted EPS — calculated assuming conversion of all dilutive potential ordinary shares — convertible bonds, preference shares, options, warrants, and ESOPs — into ordinary shares.
Ind AS 33 applies to companies whose ordinary shares or potential ordinary shares are publicly traded on any recognised stock exchange — including BSE, NSE, and regional exchanges — and companies in the process of issuing shares in public markets. Under SEBI's Listing Obligations and Disclosure Requirements (LODR) Regulations, listed companies must also disclose EPS in their quarterly financial results submitted to the exchange.
Part 1How to Calculate Basic EPS Under Ind AS 33
Basic EPS is the simpler of the two calculations. The formula is:
Step 1: Determine the Numerator
The numerator is the net profit or loss attributable to equity shareholders of the parent — after tax, after non-controlling interests (in consolidated statements), and after preference dividends. Non-cumulative preference shares: deduct only the dividend declared for the current period. Cumulative preference shares: deduct the full dividend for the current period even if not declared — arrears of preference dividends are irrelevant. If the company has discontinued operations, Ind AS 33 also requires separate EPS for continuing and total operations.
Step 2: Calculate Weighted Average Ordinary Shares
The denominator is the weighted average number of ordinary shares outstanding during the reporting period. Shares are weighted by the proportion of the reporting period for which they were in issue. Shares at start of year: full year weight (12/12). New shares issued mid-year: weighted from the date of issue. Shares bought back: excluded from the date of buyback.
Step 3: Adjust for Bonus Issues and Stock Splits
Bonus shares and stock splits require retrospective adjustment — treated as if the shares always existed from the beginning of the earliest period presented. The current year weighted average denominator and all comparative period EPS figures are restated. No time-weighting is applied. The same treatment applies to share consolidations.
Step 4: Adjust for Rights Issues at Below-Market Price
A rights issue at below-market price contains both a new share issuance element and a bonus element. Ind AS 33 requires an adjustment factor to isolate the bonus element: Adjustment Factor = Theoretical Ex-Rights Price (TERP) ÷ Actual Closing Price Before Ex-Rights Date. Where: TERP = (Value of shares in issue before rights + Proceeds from rights) ÷ (Total shares after rights). Shares before the rights issue are multiplied by the adjustment factor; shares after are time-weighted from issue date.
📌 Worked Example — Weighted Average Shares
A company with 50 lakh shares at 1 April issues 12 lakh new shares on 1 January (3 months before 31 March year-end).
Weighted Average = (50 lakh × 12/12) + (12 lakh × 3/12) = 50 + 3 = 53 lakh shares
📌 Worked Example — Bonus Issue Restatement
Company B had 40 lakh shares throughout FY 2025-26. In May 2026 (before the financial statements are finalised), they announce a 1:1 bonus issue.
Restated weighted average for FY 2025-26 = 40 lakh × 2 = 80 lakh shares. The prior year comparative EPS must also use 80 lakh shares — not the original 40 lakh.
How to Calculate Diluted EPS Under Ind AS 33
Diluted EPS answers a different question: what would EPS be if all instruments that could convert into ordinary shares actually did so? It gives investors a worst-case scenario for earnings dilution from convertible securities, options, and ESOPs currently outstanding.
Diluted EPS adjusts both the numerator and denominator of basic EPS, but only includes instruments that are dilutive — instruments whose inclusion would reduce EPS. Anti-dilutive instruments are excluded.
Convertible Bonds and Debentures
For convertible bonds, Ind AS 33 assumes conversion at the beginning of the period (or the date of issue if later):
- Numerator adjustment: add back the after-tax interest expense — because if bonds had been converted, no interest would have been paid.
- Denominator adjustment: add the number of ordinary shares that would be issued on conversion.
Dilutivity test: Calculate incremental EPS = After-Tax Interest Saved ÷ Additional Shares from Conversion. If this incremental EPS is less than basic EPS, the instrument is dilutive and included. If greater, it is anti-dilutive and must be excluded.
📌 Worked Example — Convertible Bonds (Anti-Dilutive)
Rs. 50 crore of 8% convertible bonds, convertible into 10 lakh shares. Tax rate 25%. Basic EPS = Rs. 18.
After-tax interest saved = Rs. 50 crore × 8% × (1 − 25%) = Rs. 3 crore
Incremental EPS = Rs. 3 crore ÷ 10 lakh shares = Rs. 30 per share
Since Rs. 30 > Rs. 18 (basic EPS), inclusion would increase EPS — these bonds are anti-dilutive and must be excluded from diluted EPS.
Convertible Preference Shares
- Numerator adjustment: add back the preference dividends (since conversion eliminates the obligation).
- Denominator adjustment: add the ordinary shares that would be issued on conversion.
- The same incremental EPS test applies — include only if incremental EPS from conversion is less than basic EPS.
Stock Options and ESOPs — The Treasury Stock Method
For stock options, warrants, and ESOPs, Ind AS 33 uses the treasury stock method:
📌 Worked Example — ESOP Treasury Stock Method
5 lakh options outstanding. Exercise price Rs. 100. Average market price Rs. 150 during the year.
Shares assumed issued = 5 lakh
Proceeds = 5 lakh × Rs. 100 = Rs. 500 lakh
Shares bought back at market = Rs. 500 lakh ÷ Rs. 150 = 3.33 lakh
Net dilutive shares = 5 lakh − 3.33 lakh = 1.67 lakh
These 1.67 lakh shares are added to the diluted EPS denominator. No numerator adjustment is made for options.
Out-of-the-money options — where the exercise price exceeds the average market price — are anti-dilutive. The treasury stock calculation produces a negative net dilutive shares figure. These must be excluded from diluted EPS but disclosed in the notes, as they may become dilutive in future periods if the market price rises.
Order of Including Dilutive Instruments
When multiple dilutive instruments exist, Ind AS 33 requires them to be ranked by incremental EPS from most dilutive to least dilutive, and included in that order. Once an instrument's inclusion increases EPS rather than decreasing it, all remaining instruments are excluded. This prevents a highly anti-dilutive instrument from being masked by including very dilutive instruments around it.
Side By SideBasic EPS vs Diluted EPS: Key Differences at a Glance
| Element | Basic EPS | Diluted EPS |
|---|---|---|
| Numerator | Net profit − Preference dividends | Same + after-tax interest on dilutive bonds; + preference dividends of dilutive convertible pref. shares |
| Denominator | Weighted average ordinary shares actually outstanding | Weighted average shares + all dilutive potential ordinary shares |
| Convertible bonds | Not included | Assumed converted; interest added back to numerator |
| Options / ESOPs | Not included | Treasury stock method — net dilutive shares added |
| Bonus shares | Retrospective adjustment — full year | Same retrospective adjustment |
| Rights issue | Adjustment factor applied to pre-rights shares | Same adjustment factor applied |
| Anti-dilutive instruments | N/A | Excluded from calculation — disclosed in notes |
What Ind AS 33 and SEBI LODR Require You to Disclose
Ind AS 33 requires the following disclosures:
On the Face of the P&L (Mandatory)
- Basic EPS and diluted EPS — both required on the face of the Statement of Profit and Loss
- EPS from continuing operations and discontinued operations (if applicable) — separately for basic and diluted
- Weighted average ordinary shares used in denominator — basic and diluted
- Numerator (profit or loss) used in each EPS calculation
In the Notes (Required)
- Reconciliation of numerator and denominator if any restatement occurred
- Anti-dilutive instruments — number, type, and reason for exclusion
- Post-balance sheet share transactions that would have materially changed EPS
- Quarterly EPS disclosures under SEBI LODR — current quarter and year-to-date
SEBI LODR Requirement: Under SEBI's Listing Obligations and Disclosure Requirements (LODR) Regulations, listed companies must include basic and diluted EPS in their quarterly unaudited financial results filed with the stock exchange — making accurate EPS calculation a recurring quarterly requirement, not just an annual one.
The Most Frequent Mistakes in EPS Calculation Under Ind AS 33
Based on audit and advisory experience, these are the errors most likely to create a qualified audit report or SEBI query:
01 — Not restating prior year EPS for bonus issues
Treating bonus shares as prospective from the date of issue rather than retrospective from the start of the earliest period — the single most common error in EPS calculations after bonus issues.
02 — Incorrect preference dividend treatment
Deducting only declared dividends on cumulative preference shares rather than the full annual amount — understates the preference dividend charge and overstates EPS.
03 — Including anti-dilutive instruments in diluted EPS
Including out-of-the-money options or convertible bonds that would increase EPS. Anti-dilutive instruments must be excluded from the diluted EPS calculation and disclosed separately.
04 — Wrong numerator for consolidated EPS
Using total profit rather than profit attributable to equity shareholders of the parent — the non-controlling interest (NCI) share must be excluded from the numerator in consolidated statements.
05 — Treasury stock method errors for ESOPs
Using the closing market price rather than the average market price during the period for the buyback calculation — the standard is explicit that the average is used, not the year-end price.
06 — Not applying the rights issue TERP adjustment factor
Treating a rights issue at below-market price the same as a straightforward new issue — omitting the theoretical ex-rights price (TERP) adjustment results in an incorrect weighted average denominator.
07 — Incorrect period weighting for mid-year share issues
Using full-year weighting for shares issued mid-year rather than weighting from the date of issue — always use the number of days / months from the date of allotment to year-end.
EPS Under Ind AS 33 — Common Questions Answered
What is the formula for Basic EPS under Ind AS 33?
Under Ind AS 33, Basic EPS = (Net Profit attributable to equity shareholders − Preference Dividends) ÷ Weighted Average Ordinary Shares Outstanding. For cumulative preference shares, the full annual dividend is deducted regardless of whether it has been declared. For non-cumulative preference shares, only the declared dividend for the period is deducted.
How are bonus shares treated in the EPS calculation under Ind AS 33?
Bonus shares are treated retrospectively under Ind AS 33 — they are assumed to have existed from the beginning of the earliest period presented, not from the date of issue. Both the current year weighted average shares and all comparative EPS figures are restated using the post-bonus number of shares. The same retrospective treatment applies to stock splits and share consolidations.
What is the treasury stock method used in diluted EPS?
The treasury stock method under Ind AS 33 calculates net dilutive shares from options and ESOPs. It assumes exercise proceeds (options × exercise price) are used to repurchase shares at the average market price. Only the net additional shares — issuable shares minus shares repurchaseable with proceeds — are added to the diluted denominator. Options where the exercise price exceeds average market price are anti-dilutive and excluded.
Which companies must disclose EPS under Ind AS 33?
Ind AS 33 applies to all companies with publicly traded ordinary or potential ordinary shares — listed on BSE, NSE, or any recognised Indian stock exchange — and companies in the process of public issuance. Under SEBI LODR, listed companies must also include basic and diluted EPS in quarterly financial results submitted to the stock exchange.
How is diluted EPS calculated for convertible bonds under Ind AS 33?
For convertible bonds, Ind AS 33 assumes conversion at the start of the period. Numerator: add back after-tax interest (interest × (1 − tax rate)). Denominator: add shares issuable on conversion. If the resulting incremental EPS (interest saved ÷ additional shares) is less than basic EPS, the bond is dilutive and is included. If it is more, it is anti-dilutive and excluded.
What are anti-dilutive instruments and how are they treated?
Anti-dilutive instruments are those whose assumed conversion or exercise would increase EPS rather than decrease it — such as out-of-the-money options or convertible bonds where the per-share savings exceed basic EPS. Under Ind AS 33, anti-dilutive instruments are excluded from diluted EPS but must be disclosed in the notes — including their number and nature — because they could become dilutive in future periods.
Ind AS 33 EPS is more than a reporting formality. The weighted average share calculation, the bonus issue restatement, the diluted EPS denominator for ESOPs and convertibles, and the quarterly SEBI LODR disclosure together make EPS a recurring, technical compliance exercise for every listed company — and one that directly affects how the market reads your profitability.
N D Savla & Associates provides specialist Ind AS implementation advisory including technical assistance with EPS calculation under Ind AS 33 — covering weighted average share computations, diluted EPS for complex capital structures, bonus issue restatements, rights issue adjustment factors, and SEBI disclosure requirements. Call us on +91 9819 000 511 or visit ndsavlaa.com/contact-us.
Note: Ind AS 33 is currently in force for listed companies and those in the process of listing. Examples in this article are illustrative; actual EPS figures depend on your capital structure and tax rate. Please confirm your specific calculations with a qualified Chartered Accountant.
Need specialist help with EPS calculation under Ind AS 33?
N D Savla & Associates — Chartered Accountants, Mumbai. We provide Ind AS implementation, corporate financial advisory, and accounting & tax compliance services for listed companies and IPO-bound entities.
