Fundamentals & valuation
What is P/E ratio?
Also called: Price to earnings, PE ratio
Hinglish mein padhein: P/E ratio kya hota hai?
The price-to-earnings ratio divides the share price by earnings per share. It shows how many rupees investors pay for each rupee of annual profit.
A high P/E can mean investors expect strong growth — or that the stock is expensive. A low P/E can mean value — or a business in trouble.
Compare P/E within the same sector and against the company's own history, not across unrelated industries.
Example
Share price ₹600, EPS ₹30 → P/E of 20. You pay ₹20 for every ₹1 of yearly profit.
Related terms
- EPS (Earnings per share)EPS is a company's net profit divided by its number of shares — the profit earned for each share you own.
- P/B ratioPrice-to-book compares the share price with the company's book value (net assets) per share.
- PEG ratioThe PEG ratio divides the P/E by the expected earnings growth rate, to judge whether a high P/E is justified by growth.