P/B ratio (price-to-book)
Market value compared with the accounting value of shareholders' equity.
Fundamental ratios
Live NSE examples below
What is P/B ratio?
The price-to-book ratio compares what the market pays for a company with the book value of its equity. It is the valuation measure of choice for banks and financial companies, whose assets are mostly financial and carried near market value. For asset-light businesses such as software or consumer brands, book value understates what the company is worth and P/B says little.
Formula
P/B = market cap ÷ net worth = share price ÷ book value per share
How to read it
- The right P/B depends on ROE: a company earning 20% ROE deserves a much higher P/B than one earning 8%.
- P/B below 1 means the market values the company below its accounting equity, often because returns on that equity are poor.
- For banks, falling NPAs and rising ROE usually precede P/B re-rating.
Common mistakes
- Buying low-P/B stocks without checking ROE. A persistently low-return business deserves to trade below book.
Live: NSE stocks matching this today
Stocks trading below book value 171
| Stock | P/B | ROE | P/E |
|---|---|---|---|
| RAJESHEXPORajesh Exports Limited | 0.09 | 1.0% | 8.94 |
| HEXATRADEXHexa Tradex Limited | 0.18 | 0.0% | 563.54 |
| DHUNINVDhunseri Investments Limited | 0.19 | 5.9% | 3.18 |
| HGSHinduja Global Solutions Limited | 0.19 | -0.9% | — |
| ZUARIINDZUARI INDUSTRIES LIMITED | 0.20 | 2.9% | 6.86 |
| NBIFINN. B. I. Industrial Finance Company Limited | 0.20 | 0.5% | 37.42 |
| COFFEEDAYCoffee Day Enterprises Limited | 0.23 | 6.8% | 3.36 |
| JISLDVREQSJain Irrigation Systems Limited | 0.28 | — | — |
