What is the P/B ratio (Price-to-Book)?
P/B compares a stock’s price to its book value (net assets per share). Especially useful for banks and asset-heavy businesses.
The price-to-book (P/B) ratio compares the share price to the company’s book value per share — what would theoretically be left for shareholders if the company sold all assets and paid off all debts. A P/B of 1 means you are paying exactly the accounting value of the net assets.
P/B shines for businesses whose value sits in their balance sheet — banks, NBFCs, insurers, and manufacturers. For these, book value is meaningful and a low P/B can flag a cheap stock. It is far less useful for asset-light firms like IT or consumer brands, whose value is people and brand, not buildings.
As always, context matters. A bank trading below 1x book may be cheap — or the market may fear its loans are worth less than stated. Pair P/B with return on equity (ROE): a high-ROE bank deserves a higher P/B than a struggling one.
Formula
P/B = Share price ÷ Book value per share
Example
A bank trading at ₹800 with a book value of ₹400 per share has a P/B of 2. A peer at ₹300 with ₹400 book value trades at 0.75x book — cheaper on assets, but check why.
See it on real companies
Browse live financials and decoded filings, or just ask in plain English.
Common questions
What is a good P/B ratio?
It varies by sector. For banks, anything from below 1 to around 3 is common; quality lenders command higher multiples. Always read P/B alongside ROE — high returns justify a higher P/B.
Why is P/B less useful for IT companies?
Asset-light businesses derive value from talent, software, and brand — things barely reflected in book value. Their P/B looks very high but means little; use P/E and growth instead.