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Valuation
Also called: P/B ratio, PB ratio, Price to book value
Price to book (P/B) is the share price divided by the company's book value per share — its net worth on the balance sheet per share. A P/B of 1 means the market values the company at exactly its stated net worth.
P/B = Share price ÷ Book value per share
A bank's shares trade at ₹300 and its book value is ₹200 per share. Its P/B is 300 ÷ 200 = 1.5.
Useful where the balance sheet is the business — banks, lenders, property — because the assets are real and countable.
Below one means the market values the company at less than its stated net worth. That is either an opportunity or a warning that the stated worth is optimistic.
| Below 1 | Priced below stated net worth. |
|---|---|
| 1 to 3 | Ordinary for a profitable company. |
| 3 to 8 | The premium is for the earnings, not the assets. |
| Above 8 | Assets explain almost none of this price. |
Rough conventions for an ordinary company; sectors differ. A range is not a buy or sell level.
Price to book (P/B) is the share price divided by the company's book value per share — its net worth on the balance sheet per share. A P/B of 1 means the market values the company at exactly its stated net worth.
P/B = Share price ÷ Book value per share. A bank's shares trade at ₹300 and its book value is ₹200 per share. Its P/B is 300 ÷ 200 = 1.5.
No. Price to book describes one aspect of a company, a price or a contract, and it is best read alongside other numbers and the business itself. Jivani Markets is a research and education platform; it does not give buy, sell or hold recommendations.