---
title: "Stock P/E and P/B Ratio: How to Read Them | RupeeCase"
description: "How to read a stock's P/E and P/B against the Nifty and its sector, with NSE figures for TCS, Tata Steel, Titan and banks, and why P/B ÷ P/E is ROE."
source_url: "https://www.rupeecase.com/guides/stock-pe-pb-ratio"
---

## The two ratios in one paragraph each

**P/E, price to earnings.** If a share trades at ₹1,000 and the company earned ₹50 per share over the last twelve months, the P/E is 20: you pay ₹20 for each ₹1 of yearly profit. Turned upside down it is the earnings yield, 5%. The P/E uses profit after tax, so it moves with every quarterly result as well as every price.

Read 2 more paragraphs, 95 words
**P/B, price to book.** Book value is the company's net worth on its balance sheet: assets minus liabilities. If the same company has ₹250 of net worth per share, the P/B is 4. Book value moves slowly, so P/B is steadier than P/E, and it is the usual yardstick for banks and lenders, whose assets are mostly loans carried near their value.

The [module on reading financial statements](/learn/path-1/module-1-4-reading-financial-statements) shows where both figures come from in a company's results, and the [Nifty PE guide](/guides/nifty-pe-ratio) applies the same ratios to the whole index.

## Comparison one: against the index and the sector

A P/E means something only next to another P/E. The two references NSE gives you every day are the Nifty 50 and the stock's sector index.

  P/E on 12 Oct 2026: stocks and indices on the same scale

    1. State Bank of India**10.27**

    2. Nifty Bank index**13.02**

    3. TCS**15.04**

    4. Nifty IT index**17.69**

    5. Nifty 50**19.12**

    6. Nifty FMCG index**30.59**

    7. Nestle India**67.45**

    8. Avenue Supermarts (DMart)**73.62**

  Company P/Es from NSE's daily P/E file and index P/Es from NSE's daily index file, 12 Oct 2026. Not a view on any stock.

Read 2 more paragraphs, 153 words
The spread is wide for reasons that have little to do with cheap or dear. Banks earn on borrowed money and their profits swing with the credit cycle, so markets pay less for each rupee of them. Consumer companies with steady demand and little debt command more. A retailer still opening stores at a fast clip is priced for profits years away. So the first comparison is within the sector: a bank at 10 times earnings against a bank index at 13, an IT company at 15 against an IT index at 17.69. Comparing a bank's P/E with an FMCG company's says almost nothing.

The second comparison is with the stock's own past, on the same earnings basis. A company that has traded between 20 and 30 times earnings for a decade and now trades at 15 has either become cheaper or become a worse business; finding out which is the work.

## Comparison two: what moved the P/E

A P/E falls when the price falls or when earnings rise. Dividing the price by the P/E gives the earnings per share NSE's figure rests on, which lets you split the change in two. Here are four large companies, 13 Oct 2025 against 12 Oct 2026:

| Company | P/E then | P/E now | Price change | Earnings per share change | What moved it |
| --- | --- | --- | --- | --- | --- |
| TCS | 22.13 | 15.04 | −29.3% | +4.0% | The price |
| Tata Steel | 53.14 | 19.26 | −0.5% | +174.6% | The earnings |
| Titan | 84.47 | 67.97 | +24.5% | +54.7% | Earnings rose faster than the price |
| Hindustan Unilever | 54.84 | 29.14 | −27.0% | +37.5% | Both |

    **Myth**A low P/E means a stock is cheap; a high P/E means it is expensive.

    **Fact**Tata Steel's P/E was 53.14 in Oct 2025 and 19.26 a year later at about the same price. A cyclical company's P/E is highest when its profits are lowest.

Read 2 more paragraphs, 180 words
Each row tells a different story. TCS became cheaper on this measure because investors paid less for nearly the same profit. Tata Steel's P/E of 53 a year earlier was high because its profits were near a cyclical low, not because the share was expensive; as profits recovered the P/E collapsed at an unchanged price. That is the classic trap with cyclical companies, steel, metals, sugar, commodities: they look most expensive on P/E near the bottom of their cycle and cheapest near the top. Titan's price rose a quarter, yet its P/E fell, because earnings rose faster. Hindustan Unilever's earnings per share rose 37.5% in NSE's figures: a jump that size in a mature consumer company is worth checking in the results for a one time item before treating the lower P/E as lasting.

The note [EPS grew, cash did not](/blog/2026-06-09-morning-eps-vs-fcf/) and the [module on revenue and earnings quality](/learn/path-9/module-9-2-revenue-quality-and-earnings-quality) cover the other checks on the "E": whether the profit is turning into cash, and whether it came from the business or from a one off.

## P/B, and the link to return on equity

P/B is most useful where P/E is weakest. For a bank, earnings swing with loan losses, but book value, the capital that absorbs those losses, moves slowly. On 12 Oct 2026 NSE showed the Nifty Bank at a P/B of 1.65 and the Nifty PSU Bank at 1.11, against 2.75 for the Nifty 50.

| Index | P/E | P/B | P/B ÷ P/E, about the ROE |
| --- | --- | --- | --- |
| Nifty IT | 17.69 | 4.96 | 28.0% |
| Nifty FMCG | 30.59 | 7.32 | 23.9% |
| Nifty 50 | 19.12 | 2.75 | 14.4% |
| Nifty Bank | 13.02 | 1.65 | 12.7% |
| Nifty PSU Bank | 7.23 | 1.11 | 15.4% |
| Nifty Smallcap 250 | 34.41 | 3.42 | 9.9% |

Read 2 more paragraphs, 108 words
There is a simple identity between the two ratios. Price ÷ book divided by price ÷ earnings is earnings ÷ book, which is the return on equity (ROE). It explains most of the gaps in P/B across sectors:

The IT index trades at nearly five times book with a P/E below the Nifty's because its companies earn about 28% on their equity with little capital. The Smallcap 250 trades at a higher P/E than the Nifty 50 while earning less on its equity, which is what investors paying for future growth look like in the numbers. The note [DuPont: same ROE, three different businesses](/blog/2026-05-24-evening-dupont-roe-three-stories/) breaks ROE down further.

## A checklist for reading a stock's valuation

* **Use the right earnings**
* **Look for one time items**
* **Compare within the sector,**
* **For cyclicals, look through the cycle**
* **For banks and lenders, start with P/B**
* **Remember what a ratio cannot tell you**

Read a list, 168 words

* **Use the right earnings.** Trailing twelve months, and consolidated for groups with large subsidiaries. NSE moved its index P/E to consolidated earnings in March 2021, which cut the Nifty's P/E overnight; the same choice can change a single company's figure.
* **Look for one time items.** A sale of a business, a tax write back or an impairment can halve or double a year's earnings. Strip them out before comparing.
* **Compare within the sector,** then with the stock's own range over several years.
* **For cyclicals, look through the cycle.** Average earnings over five to ten years, or use P/B, instead of a single year's P/E.
* **For banks and lenders, start with P/B** and the quality of the loan book; then check ROE.
* **Remember what a ratio cannot tell you.** Valuation says how much growth the price assumes, not whether it will come. The [value factor module](/learn/path-3/module-3-2-value-factor-deep-dive) shows how cheapness has paid as a systematic rule across many stocks, which is different from judging one.

## How this shows up in RupeeCase

Where it sits in RupeeCase, in words
RupeeCase rules do not pick stocks by eye. They score a defined universe on a published rule and hold the top names, so a single P/E judgement never decides a holding; the [stock picking guide](/guides/how-to-pick-stocks-systematically) explains the approach. [Midcap](/strategies/midcap) applies a momentum rule to mid sized companies, 20 holdings rebalanced every 2 weeks: model CAGR 38.75%, deepest fall −24.87%, as of 27 Apr 2026.

## Questions investors ask

How do you read the P/E ratio of a stock?Divide the share price by the last twelve months' earnings per share, then compare the result with the stock's own history, its sector index and the Nifty 50. Check whether a change came from the price or from earnings.

What is a good P/E ratio for Indian stocks?There is no single good number. On 12 Oct 2026 the Nifty 50 was at 19.12, the Nifty Bank at 13.02 and the Nifty FMCG at 30.59. A P/E is high or low only against the right comparison.

What is the difference between P/E and P/B?P/E compares the price with a year's profit; P/B compares it with net worth on the balance sheet. P/B is steadier and is the usual measure for banks. P/B divided by P/E equals the return on equity.

Why is a high P/E sometimes a sign of a cheap stock?For cyclical companies, profits are lowest at the bottom of the cycle, which pushes the P/E up. Tata Steel's P/E was 53.14 in Oct 2025 and 19.26 a year later at about the same price, as profits recovered.

Where can I find a stock's P/E in India?NSE publishes a daily P/E file for listed companies and P/E, P/B and dividend yield for every index in its daily index file. Company results give the earnings and book value behind them.

Is a stock with a P/E below the Nifty's undervalued?Not necessarily. Banks, metals and energy companies usually trade below the Nifty's P/E. Compare a stock with its sector and its own history, and check the quality of its earnings.

SSources

## Where the figures come from.
Show the 5 sources

1. NSE daily P/E files for listed companies, 13 Oct 2025 and 12 Oct 2026 (symbol P/E): TCS, Tata Steel, Titan, Hindustan Unilever, State Bank of India, Nestle India, Avenue Supermarts. [nseindia.com](https://www.nseindia.com/)
2. NSE equity bhavcopies: closing prices on 13 Oct 2025 and 12 Oct 2026, checked for splits and bonuses in between.
3. NSE daily index file of 12 Oct 2026: P/E, P/B and dividend yield of the Nifty 50, Nifty Bank, Nifty PSU Bank, Nifty IT, Nifty FMCG and Nifty Smallcap 250.
4. NSE daily index files: the Nifty 50 P/E change of basis on 31 Mar 2021 (40.43 to 33.20), as covered in the Nifty PE guide.
5. RupeeCase lineup data, as of 27 Apr 2026: Midcap model CAGR and deepest fall.

  ASee it on RupeeCase

## Midcap
20 stocks from the Nifty Midcap 150. Fortnightly rotation. Rebalanced every 2 weeks, in your own demat. High risk band.

  Ranked by price momentum, not by P/E: [Microcap](/strategies/microcap).

  [Sign up for RupeeCase](https://invest.rupeecase.com/signup?strategy=midcap)[CAGR calculator](/learn/tools/cagr-calculator)

  [CAGR38.8%Sharpe1.49Max DD−24.9%Minimum₹90,000Model, back tested, as of 27 Apr 2026. Minimum as of 8 Aug 2026. Not client returns, not a promise.](/strategies/midcap)

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* [ValuationNifty PE ratio: what it measures, where it stands, and what it has predicted](/guides/nifty-pe-ratio)
* [Stock selectionHow to pick stocks systematically: a five part rules recipe](/guides/how-to-pick-stocks-systematically)
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