By VestAI Research | Last updated: March 2026
EV/EBITDA: Meaning, Definition & Indian Stock Market Examples
Enterprise value divided by EBITDA — capital-structure-neutral valuation multiple.
What is EV/EBITDA?
EV/EBITDA compares a company's enterprise value to its earnings before interest, tax, depreciation, and amortisation. Unlike PE ratio, EV/EBITDA is not distorted by differences in capital structure, tax rates, or depreciation policies, making it ideal for cross-company and cross-border comparisons.
EV/EBITDA — Indian Stock Market Example
Indian IT companies typically trade at EV/EBITDA of 15–25x. Telecom companies like Jio trade at 18–30x due to high growth expectations. Infrastructure companies may trade at 8–14x. Steel companies trade at 4–8x given their cyclicality.
Analyse any Indian stock using EV/EBITDA
Ask Orion: “What is the EV/EBITDA for [stock] and how does it compare to peers?”
Analyse with OrionFrequently Asked Questions about EV/EBITDA
What is a good EV/EBITDA for Indian stocks?
It varies by sector: IT 15–25x, FMCG 25–40x, telecom 12–20x, metals 4–8x, infrastructure 8–14x. Lower is generally better, but fast-growing sectors justify higher multiples. Always compare within sector.
Why is EV/EBITDA preferred over PE for acquisition analysis?
In M&A, the acquirer assumes the target's debt too. EV captures total acquisition cost. EBITDA removes accounting distortions from depreciation and amortisation, which vary widely by industry and accounting policy. EV/EBITDA thus gives a cleaner comparison of operating value.
Related Terms
EBITDA
Earnings before interest, tax, depreciation and amortisation — proxy for operating cash flow.
Enterprise Value
Market cap + net debt — total value of the business regardless of capital structure.
PE Ratio
Price divided by earnings per share — shows how much investors pay per ₹1 of profit.
Operating Profit Margin
Operating profit (EBIT) ÷ revenue — shows efficiency before interest and tax.
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