P/E ratio: what it means and how to read it
What is P/E ratio?
Price ÷ earnings per share: how many rupees you pay for every ₹1 of yearly profit.
The P/E ratio says how many rupees the market pays today for one rupee of a company's yearly profit. At a P/E of 20 a buyer pays ₹20 for each ₹1 the company earned last year; if profit never changed, it would take 20 years of earnings to add up to the price. Turned upside down it is an earnings yield: a P/E of 20 is a 5% yield, which can be set beside what a bank deposit or a government bond pays.
A P/E is a price tag for expected growth as much as for current profit. Markets pay 50 or 60 times earnings for a company whose profit they expect to double in a few years, and 8 times for one they expect to shrink. So the ratio answers 'how much is being paid', never 'is it worth it'. That second question needs growth, the quality of the earnings and the balance sheet alongside.
How it is calculated
A worked example
Why does P/E ratio matter?
The most common way to judge whether a share is cheap or expensive.
What is a good P/E ratio?
Compare with the sector and the company's own past, not a fixed number. A low P/E can also mean the market expects profits to fall.
There is no single good P/E. Read it three ways at once: against the company's own industry, against its own five and ten year history, and against how fast its profit is growing. A P/E of 30 is cheap for a business compounding profit at 25% a year with little debt and dear for a cyclical one at the top of its cycle.
Reading scale
What are the common mistakes with P/E ratio?
What is a typical P/E ratio in India today?
The median across the 4355 listed companies that report it, as of 12 Oct 2026. Half sit above each figure and half below.
By company size
By industry
What is P/E ratio for India's largest companies today?
The latest figure for the largest companies with a page here. Each links to what the rest of that company's numbers mean.