By VestAI Research | Last updated: March 2026
PE Ratio: Meaning, Definition & Indian Stock Market Examples
Price divided by earnings per share — shows how much investors pay per ₹1 of profit.
What is PE Ratio?
The Price-to-Earnings (PE) ratio measures how much investors are willing to pay for each rupee of a company's annual earnings. A PE of 20 means the market prices every ₹1 of EPS at ₹20. It is the most widely used valuation metric on NSE and BSE.
PE Ratio — Indian Stock Market Example
TCS typically trades at 25–35x PE due to its high margins and dollar revenues. PSU banks like SBI trade at 5–12x because of governance concerns and slower growth. Nifty 50 has historically averaged 18–22x PE.
Analyse any Indian stock using PE Ratio
Ask Orion: “What is the PE Ratio for [stock] and how does it compare to peers?”
Analyse with OrionFrequently Asked Questions about PE Ratio
What is a good PE ratio for Indian stocks?
It depends on the sector. IT companies: 22–35x; private banks: 18–28x; FMCG: 45–70x; PSU banks: 5–12x. Always compare within sector, not across sectors.
Can PE ratio be negative?
Yes. When a company reports a net loss, EPS is negative and PE becomes meaningless. Screeners usually show N/A or "–" in this case. Use Price-to-Sales or EV/Revenue for loss-making companies instead.
Related Terms
Earnings Per Share
Net profit divided by total shares — profit attributable to each share.
PEG Ratio
PE divided by EPS growth rate — adjusts PE for expected growth.
PB Ratio
Price divided by book value per share — compares market price to net asset value.
Earnings Yield
EPS ÷ share price — the inverse of PE ratio, comparable to bond yields.
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