Fundamental Library

Accumulated Depreciation
Adjustments (Cash Flow from Operating Activities)
Advance from Customers
Asset Turnover
Bonus Issue
Book Value / Equity Capital
CAGR (Compound Annual Growth Rate)
Capital Work in Progress (CWIP)
Cash and Cash Equivalents
Cash Conversion Days
Cash Flow Per Share (CF/Share)
Cash From Financing
Cash From Investing
Cash From Operations
Changes in Working Capital
Common Sized
Consolidated Financial Statements
Current Assets
Current Investments
Current Liabilities
Current Ratio
Discount Rate
Discounted Cash Flow (DCF)
Dividend Yield
Effective Tax Rate
Employee Cost
Exceptional Items (Income Statement)
Executive Director
Face Value
Fair Value
FCF Per Share
FII (Foreign Institutional Investor)
Financial Leverage Multiplier in Du Pont Analysis
Free Cash Flow Yield
Government Holding
Gross Block
Implied Growth Rate
Independent Directors
Institutional Holdings
Interest Coverage Ratio
Interest Expense
Inventory Days
Long Term Loans & Advances
Long Term Provisions
Manufacturing Expenses
Market Cap
Net Block
Net Cash Flow
Net Profit
Non-Current Assets
Non-Current Investments
Non-Current Liabilities
Non-Executive Director
Non-Independent Directors
NPM (Net Profit Margin)
OPM (Operating Profit Margin)
Other Current Assets
Other Current Liabilities
Other Expense
Other Income
Other Non-Current Assets
Payable Days
Power Fuel Cost
Promoter Pledge
PV (Present Value)
Quarterly Results
Raw Material Cost
Receivable Days
Retail/Public Shareholding
Rights Issue
ROA (Return on Assets)
Secured Loans
Selling and Distribution Costs
SGA costs
Share Capital
Shareholding Pattern
Short Term Borrowings
Short term loan and advances
Short Term Provisions
Standalone Financial Statements
Stock Splits
Tax %
Total Expense
Trade Payables
Trade Receivables
Unsecured Loans


Explanation: The Price-to-Book (P/B) ratio compares a company’s market price per share to its book value per share. The book value per share represents the net asset value of the company, calculated by subtracting total liabilities from total assets and dividing by the number of outstanding shares. A low P/B ratio suggests that the stock may be undervalued relative to its book value, while a high P/B ratio may indicate overvaluation.

How it helps in investment decision making:

Value Assessment: Investors use the P/B ratio to assess whether a stock is trading at a discount or premium relative to its book value. A low P/B ratio may suggest that the stock is undervalued, presenting an opportunity for investors to buy shares at a lower price compared to its intrinsic value. Conversely, a high P/B ratio may signal that the stock is overvalued, prompting investors to exercise caution or consider selling.

Comparison with Industry Peers: Investors compare the P/B ratio of a company with its industry peers to gauge its relative valuation. A lower P/B ratio compared to competitors may indicate that the company is relatively undervalued within its industry, making it an attractive investment opportunity. Conversely, a higher P/B ratio relative to peers may suggest overvaluation or superior market sentiment, warranting further analysis.

Historical Analysis: Investors analyze changes in a company’s P/B ratio over time to identify trends in valuation. Significant deviations from historical P/B ratios may signal shifts in investor sentiment, changes in the company’s financial health, or alterations in market conditions. Understanding these trends can help investors make informed decisions about buying, holding, or selling stocks.

Example: TCS has a Price-to-Book (P/B) ratio of 16.01 as of FY23. This indicates that the market price of TCS’s shares is approximately 16.01 times its book value per share. Investors can use this information to assess whether TCS’s stock is trading at a premium or discount relative to its book value. If the P/B ratio is significantly higher than industry peers or historical averages, it may suggest that TCS’s stock is overvalued, prompting investors to conduct further analysis before making investment decisions. Conversely, a lower P/B ratio may indicate that TCS’s stock is undervalued, potentially presenting a buying opportunity for investors seeking value stocks.

You can view P/B Ratio for any company over time on Radar under Valuation Ratios in the Ratios section.

Open Demat Account