The Price-to-Book (P/B) Ratio Calculator evaluates whether a stock is undervalued or overvalued by comparing its market price to its book value (net asset value). It is the primary valuation metric used for capital-intensive industries like Banking, NBFCs, and Manufacturing, where asset value is a more reliable floor than earnings.
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The Price-to-Book (P/B) Ratio Calculator evaluates whether a stock is undervalued or overvalued by comparing its market price to its book value (net asset value). It is the primary valuation metric used for capital-intensive industries like Banking, NBFCs, and Manufacturing, where asset value is a more reliable floor than earnings.
Hindi Introduction
P/B रेश्यो कैलकुलेटर विशेष रूप से बैंकिंग और विनिर्माण क्षेत्रों में शेयरों का मूल्यांकन करने के लिए एक विश्वसनीय टूल है। जानें कि क्या आप कंपनी की संपत्ति के लिए सही कीमत चुका रहे हैं।
Understanding P/B Ratio and ROE
A P/B ratio cannot be viewed in isolation. It must be paired with Return on Equity (ROE). A company with a high ROE justifies a higher P/B ratio. Conversely, a low P/B with a low ROE might be a 'value trap'.
P/B Ratio = Market Price per Share / Book Value per ShareWhere:
- • Book Value = (Total Assets - Total Liabilities) / Total Shares
- • Interpretation: P/B < 1.0 means you are buying the assets for less than their accounting value.
- • Fair P/B ≈ ROE% / 10 (A rough rule of thumb for standard growth).
Example: Valuing an Indian Bank
Bank A trades at ₹500. Its Book Value per share is ₹200.
1. P/B Ratio: 500 / 200 = 2.5x.
2. Peer Comparison: If the industry average is 3x, Bank A might be undervalued.
3. ROE Check: If Bank A has an ROE of 18% while peers have 12%, a 2.5x P/B is very attractive.
Price: ₹500
Book Value: ₹200
P/B Ratio: 2.5
How to Perform Stock Fundamental Analysis
1
Search Ticker
Enter the name or NSE/BSE symbol of the Indian stock.
2
Audit Financials
Review key ratios like P/E, Debt-to-Equity, and ROCE.
3
Intrinsic Value
Check the DCF or Graham value signals to see if the stock is undervalued.
4
Final Assessment
Review the AI-generated 'Stock Score' for a holistic health check.
P/B Ratio vs P/E Ratio
When to use which metric:
| Metric | Best For | Why? |
|---|---|---|
| P/B Ratio | Banks, Real Estate, Infra | Assets drive value, earnings can be volatile |
| P/E Ratio | IT, FMCG, Services | Earnings drive value, low physical assets |
| EV/EBITDA | Capital Intensive / Debt heavy | Neutralizes debt impact |
Frequently Asked Questions
⚠️ Disclaimer
Calculations are for educational purposes. Consult a financial advisor before investing.