Educational Purpose Only: P/E ratios vary by industry. Always compare within the same sector.
How it works
The Price-to-Earnings (P/E) ratio is one of the most widely used valuation metrics in stock analysis. It tells you how many rupees investors are willing to pay for each rupee of a company's earnings. A low P/E may suggest a stock is undervalued, while a very high P/E may indicate that the market is pricing in high future growth — or that the stock is speculative.
Use the "Find Fair Value" mode to work in reverse: if you believe a stock deserves a certain P/E multiple based on industry averages or growth expectations, enter that P/E and the EPS to see what price would be fair.
P/E benchmarks by sector (India)
| Sector | Typical P/E Range |
|---|---|
| IT / Technology | 25–50x |
| FMCG / Consumer Staples | 35–60x |
| Pharmaceuticals | 20–40x |
| Banking (Private) | 15–25x |
| Banking (PSU) | 5–12x |
| Commodities / Metals | 5–15x |
Frequently Asked Questions
What is the P/E ratio?
The Price-to-Earnings (P/E) ratio is the current stock price divided by the earnings per share (EPS). It tells you how many rupees investors pay for each rupee of earnings. A P/E of 20 means investors pay ₹20 for every ₹1 of annual earnings. It is one of the most widely used valuation metrics in equity analysis.
What is a good P/E ratio?
There is no universal 'good' P/E — it is highly sector-dependent. Technology and high-growth companies often trade at P/Es of 40–80x. FMCG and consumer staples trade at 30–50x. Banking and financial stocks at 10–20x. Commodity and cyclical companies at 5–15x. Always compare a stock's P/E to its own historical average and to peers in the same sector.
What is the difference between trailing and forward P/E?
Trailing P/E uses the actual earnings from the last 12 months (LTM/TTM) — it is based on reported, historical data. Forward P/E uses analyst estimates for the next 12 months. A falling forward P/E relative to trailing P/E indicates expected earnings growth, which may justify a higher current valuation.
Can P/E be negative?
Yes. If a company reports a net loss (negative EPS), the P/E ratio will be negative — which makes it meaningless for valuation. In such cases, analysts use Price-to-Sales (P/S), EV/EBITDA, or Price-to-Book (P/B) ratios instead.
What is PEG ratio and how does it improve on P/E?
The PEG (Price/Earnings-to-Growth) ratio divides the P/E ratio by the expected EPS growth rate. A PEG below 1 suggests the stock may be undervalued relative to its growth prospects. For example, a stock with a 30x P/E but 30% expected earnings growth has a PEG of 1, which is considered fairly valued.
Related Calculators
This calculator is for educational and illustrative purposes only. P/E ratios vary significantly across industries and should be compared within the same sector. This tool does not constitute investment advice.