Reading room · Fundamental analysis guides · Published 2026-11-10

Reading P/E and P/B

P/E and P/B compare a share price with the company's earnings and its book value.

Confirmed facts

• P/E is price divided by earnings per share. A P/E of 20 means you pay ₹20 for each ₹1 of yearly profit.
• P/B is price divided by book value per share (assets minus liabilities).

Historical data

• Typical P/E differs a lot between sectors, so compare a company with its own sector and its own history.

Interpretation

• A low P/E can mean good value or a business in trouble. A high P/E can mean strong growth expected or an expensive price.

Sources

• SEBI: Understanding financial statements

Educational content, not advice. Disclaimer