By VestAI Research | Last updated: March 2026
PB Ratio: Meaning, Definition & Indian Stock Market Examples
Price divided by book value per share — compares market price to net asset value.
What is PB Ratio?
The Price-to-Book (PB) ratio compares a stock's current market price to its book value per share (total assets minus liabilities divided by shares outstanding). A PB below 1 can indicate undervaluation, though it may also signal structural problems in the business.
PB Ratio — Indian Stock Market Example
HDFC Bank has historically traded at 3–4x PB reflecting its superior asset quality and ROE. State Bank of India has traded below 1x PB during NPA cycles, signalling investor skepticism. Tata Steel PB fluctuates with steel commodity cycles.
Analyse any Indian stock using PB Ratio
Ask Orion: “What is the PB Ratio for [stock] and how does it compare to peers?”
Analyse with OrionFrequently Asked Questions about PB Ratio
Is a low PB ratio always a buy signal?
No. Many value traps trade at low PB permanently — often PSU companies or those in declining industries. Always check ROE alongside PB: high ROE + moderate PB is far better than low PB + low ROE.
Which sectors use PB ratio most?
Banking and financial services rely heavily on PB since their assets are financial instruments with transparent book values. For capital-light businesses like IT or FMCG, PB is less useful.
Related Terms
PE Ratio
Price divided by earnings per share — shows how much investors pay per ₹1 of profit.
Book Value Per Share
Net assets (equity) divided by shares outstanding — accounting value per share.
Return on Equity
Net profit as a percentage of shareholder equity — measures capital efficiency.
Return on Assets
Net profit divided by total assets — measures how efficiently assets generate profit.
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