Calculate P/E ratio, P/B ratio, dividend yield, EPS, and intrinsic value to determine fair value of stocks. Fundamental analysis tools for Indian equity investors.
Calculate Price-to-Earnings ratio to determine if stocks are overvalued or undervalued compared to peers.
Compute Price-to-Book ratio for asset-heavy companies like banks, insurance, and manufacturing.
Calculate dividend yield to evaluate income-generating potential of dividend-paying stocks.
Determine Earnings Per Share to assess company profitability on per-share basis.
Estimate fair value of stocks using DCF, Graham formula, and other fundamental methods.
Stock Valuation Calculators help investors analyze whether Indian stocks listed on NSE/BSE are trading at fair value, overvalued, or undervalued. Use fundamental analysis tools including P/E ratio, P/B ratio, dividend yield, EPS, and intrinsic value calculators to make informed investment decisions based on company fundamentals rather than market sentiment. Essential for value investors following Benjamin Graham and Warren Buffett principles, fundamental analysts researching stocks, and long-term investors building quality portfolios. All calculators include industry benchmarks, sector comparisons, and Indian market context with examples from Nifty 50, Bank Nifty, and BSE 500 companies. Free tools requiring no registration, perfect for DIY stock research and portfolio construction.
Identify undervalued stocks trading below intrinsic value for potential multibagger opportunities in Indian markets
Avoid overpriced stocks with sky-high P/E ratios during market euphoria that often crash 50-70% in corrections
Compare companies within same sector using P/E, P/B ratios to find relatively cheaper alternatives with similar growth
Evaluate dividend-paying stocks for passive income stream especially useful for retirees and conservative investors
Calculate fair value using multiple methods (DCF, Graham formula, P/E-based) to cross-verify valuation estimates
Understand why banking stocks trade at 1-3x P/B while tech stocks trade at 10-20x P/E through asset-based analysis
Make data-driven entry and exit decisions instead of emotional buying at peaks and panic selling at bottoms
Build conviction in your investment thesis by quantifying upside potential versus downside risk at current prices
Industry-specific benchmarks for IT (P/E 20-25), Banking (P/B 1.5-3), FMCG (P/E 40-60), Auto (P/E 15-20)
Sector comparison showing if company trades at premium or discount to sector average multiples
Historical P/E and P/B ranges helping identify if stock is at upper or lower valuation band
Dividend yield calculations with payout ratio analysis to assess sustainability of dividends
DCF (Discounted Cash Flow) calculator with WACC, growth rate assumptions for intrinsic value estimation
Graham number calculation for conservative valuation using earnings and book value (Graham's margin of safety)
📊 Value Investors searching for undervalued quality stocks trading below intrinsic value with margin of safety
📈 Fundamental Analysts conducting deep-dive research on companies before making investment recommendations
💼 Long-term Investors building buy-and-hold portfolios focused on fundamentally strong businesses
🎓 Stock Market Students learning fundamental analysis, valuation methodologies, and financial statement analysis
👴 Dividend Investors seeking reliable income from blue-chip stocks with 3-5% dividend yields and consistent payouts
🏦 Mutual Fund Managers analyzing stocks for portfolio inclusion and determining position sizing
💰 High Net Worth Individuals evaluating direct equity investments for wealth creation and portfolio diversification
📚 Finance Professionals (CFAs, analysts, advisors) using valuation tools for client research and recommendations
P/E ratio interpretation varies significantly by sector and market conditions. Historical averages for Indian markets: Nifty 50 trades at 20-25x P/E normally, 15-18x in bear markets, 28-35x in bull markets. Sector benchmarks: IT services 20-25x (TCS, Infosys), FMCG 40-60x (HUL, Nestle), Banking 1-3x P/B or 15-20x P/E (HDFC Bank, ICICI), Pharmaceuticals 25-35x, Auto 15-20x, Metals 8-12x (cyclical). Growth companies command premium: Asian Paints 60-80x, Titan 70-90x justified by consistent 15-20% earnings growth. General rules: P/E <15 potentially undervalued (check reason - cyclical downturn or fundamental issues?), P/E 15-25 fairly valued for stable businesses, P/E >30 expensive unless high growth justified. Never use P/E in isolation - compare with 5-year average P/E, sector P/E, PEG ratio (P/E divided by growth rate). Example: Stock at 40x P/E with 40% growth (PEG 1) is cheaper than stock at 20x P/E with 10% growth (PEG 2). Context matters more than absolute number!
P/E (Price-to-Earnings) measures price relative to profitability - use for companies where earnings drive value (IT, FMCG, pharma, services). P/B (Price-to-Book) measures price relative to net assets - use for asset-heavy businesses (banks, insurance, manufacturing, real estate). Key differences: P/E forward-looking (earnings potential), P/B backward-looking (balance sheet). Banking example: HDFC Bank P/B 3.5x, P/E 20x. P/B matters because assets (loan book) drive earnings. Book value provides downside protection - if bank trades below book value (P/B <1), buying assets at discount. IT example: TCS P/B 15x, P/E 25x. P/B less relevant because value comes from human capital, brand, client relationships (intangibles) not on balance sheet. Rule of thumb: Asset-light businesses (tech, consulting) - use P/E. Asset-heavy businesses (banks, insurance, manufacturing, utilities) - use P/B. Real estate - use P/B. Retailers - use P/E + same-store sales growth. Always use multiple metrics together - P/E, P/B, ROE, debt-to-equity, revenue growth for comprehensive picture.
Intrinsic value is the "true worth" of a stock based on fundamentals, independent of market price. Multiple calculation methods: (1) DCF (Discounted Cash Flow) - professional method: Project future cash flows, discount to present value using WACC. Complex but most accurate. Example: Company generates ₹100 crore free cash flow, growing 15% annually, WACC 12%. Present value of 10-year cash flows + terminal value = intrinsic value per share. (2) Graham Number = √(22.5 × EPS × Book Value per Share). Conservative method by Benjamin Graham. Provides margin of safety. Example: EPS ₹50, BVPS ₹300, Graham Number = √(22.5 × 50 × 300) = ₹291. If trading at ₹250, undervalued. (3) P/E-based: Intrinsic Value = EPS × Fair P/E (sector average). Example: EPS ₹40, sector P/E 25, fair value = ₹1,000. (4) Dividend Discount Model: For dividend stocks, PV of future dividends. Reality check: Intrinsic value is estimate, not absolute truth. Different assumptions give different values. Use multiple methods, cross-verify. If all methods suggest ₹500-600 and stock trades at ₹300, strong buy signal. At ₹700, avoid. Margin of safety principle: Buy at 30-40% discount to intrinsic value to account for estimation errors.
High P/E doesn't automatically mean overvalued - context crucial. Justified reasons: (1) High growth: Asian Paints 80x P/E justified by 15-20% consistent growth, strong moat, predictable earnings. Pay premium for certainty. (2) Quality: HUL 60x P/E reflects dominant brands, pricing power, capital-light model generating high ROE 80%+. (3) New-age sectors: Clean energy, EV stocks command 50-100x P/E due to future growth potential despite current low earnings. (4) Cyclical bottom: Metal stock at 50x P/E might be at cyclical earnings trough - normalizing to 15x at peak earnings. (5) Market leadership: Monopoly/duopoly players (Nestle, Titan) trade at premium to smaller competitors due to sustainable competitive advantage. When high P/E is warning sign: (1) Sector-wide overvaluation (tech bubble 2000, small-cap bubble 2017-18), (2) Earnings growth slowing but P/E expanding - unsustainable, (3) One-time earnings boost inflating P/E temporarily, (4) No moat - easily replicable business shouldn't trade at 50x P/E. Use PEG ratio: P/E divided by growth rate. PEG <1 undervalued, >2 overvalued. Stock at 60x P/E with 60% growth (PEG 1) cheaper than 20x P/E with 5% growth (PEG 4). Always compare: Historical P/E band (5-10 year range), Sector P/E, Global peers P/E.
Dividend yield = (Annual Dividend per Share / Current Price) × 100. Useful for income investors but has limitations. When dividend yield is reliable indicator: (1) Blue-chip stocks with consistent dividend history (HDFC Bank, ITC, Coal India) - high yield 3-5% suggests undervaluation or 4-5% is attractive for income, (2) Mature companies with stable cash flows - utilities, FMCG, telecom, (3) Sector comparison - if company yields 5% vs sector average 3%, investigate why (undervalued or troubled?), (4) Historical comparison - if stock typically yields 2-3% but now yields 5%, could be buying opportunity. Warning signs - yield traps: (1) Dividend cut risk - high payout ratio 80%+ unsustainable, (2) Debt-funded dividends - borrowing to pay dividends destroys value, (3) Cyclical peak - high dividend at earnings peak, will reduce at downturn, (4) Special dividends inflating yield - one-time event, not recurring. Example 1: ITC yields 5% consistently with 60% payout ratio, ₹30,000 crore cash, no debt - genuine high yield. Example 2: Telecom company yields 8% but burning cash, high debt, payout ratio 120% - yield trap, avoid. Evaluate together: Yield, payout ratio, free cash flow, debt levels, dividend growth rate. Ideal: 3-4% yield, 40-60% payout ratio, 10-15% annual dividend growth. Remember: Total return = dividend yield + capital appreciation. 5% yield but 10% price decline = -5% total return!
EPS (Earnings Per Share) = (Net Profit - Preferred Dividends) / Outstanding Shares. Measures profitability attributable to each share. Why EPS matters more than revenue: Revenue is top-line (sales), EPS is bottom-line (profit). Company can grow revenue 50% but EPS by 0% (or even decline) if margins compress, costs increase, or dilution happens. Real examples: Zomato grows revenue 100% YoY but losses widen (negative EPS) - valuation based on future EPS potential. Reliance grew revenue 30% but EPS declined due to refining margin squeeze. Types of EPS: (1) Basic EPS - simple profit/shares calculation, (2) Diluted EPS - accounts for convertible instruments, stock options (more conservative), (3) Cash EPS - adds back depreciation/amortization to profit (operating reality). Growth trajectory matters: 15-20% consistent EPS growth creates wealth. Example: Stock price typically grows in line with EPS over time. If EPS compounds at 18% for 10 years, stock price likely does too. Quality of EPS: (1) Check if from operations or one-time gains, (2) Verify cash flow matches profit, (3) Exclude extraordinary items. Common manipulation: Sell assets, book profit, show high EPS temporarily. Red flag: Revenue grows 30%, EPS grows 5% - where's the profit going? Usually rising costs, declining margins, or increased competition. Focus on EPS CAGR (5-year), not quarterly fluctuations. Successful investing: Find companies growing EPS 15%+ consistently, buy at reasonable P/E (15-25x), hold long-term. Magic formula: High EPS growth + Reasonable P/E = Multibagger potential.
Neither universally correct - depends on investment style and stock quality. Low P/E strategy (Value Investing): Buy stocks trading at P/E 8-12x when sector average 20x. Logic: Market undervalues, will re-rate upward. Works when: (1) Cyclical stocks at bottom (metals, oil & gas), (2) Temporary problems depressing price, (3) Hidden assets not reflected in earnings. Risk: Value trap - stock cheap for reason (declining business, disruption threat, poor management). Example: Telecom stocks 2016-2019 looked cheap at 8x P/E but Jio disruption crushed earnings. Lesson: Cheap can become cheaper. High P/E strategy (Growth Investing): Buy quality businesses at P/E 30-50x if growth justifies. Logic: Pay premium for certainty, growth, moat. Works for: (1) Consistent growth businesses (FMCG, pharma, IT), (2) Market leaders with pricing power, (3) Long runway for expansion. Risk: Over-paying. If growth doesn't materialize, painful de-rating (P/E contracts from 50x to 25x even if earnings grow). Example: 2017 small-cap mania - stocks at 60-80x P/E crashed 70% despite earnings growth. Best approach: (1) Quality over valuation - would rather own great business at fair price than mediocre at cheap price, (2) Growth at reasonable price (GARP) - find 15-20% growers at 20-25x P/E (PEG ~1), (3) Sector rotation - buy value in cyclicals at bottom, growth in structural winners. Personal strategy matters: Young investors (20-30s) can afford growth premium, time for compounding. Retirees need value/dividend stocks for capital preservation.
Traditional metrics (P/E, EPS) don't work for loss-making companies - negative earnings makes P/E meaningless. Alternative valuation methods: (1) Price-to-Sales (P/S) ratio: Market Cap / Annual Revenue. Compares revenue multiples. Zomato 7x P/S vs global peers Uber Eats, DoorDash at 4-5x - expensive or justified by India growth? (2) GMV (Gross Merchandise Value) multiples: For marketplaces, GMV shows transaction value. Flipkart valued at 1-2x GMV. (3) User metrics: Cost per user acquisition, lifetime value (LTV), monthly active users (MAU). If acquiring users profitably (LTV > CAC), path to profitability exists. (4) Discounted Cash Flow: Project when company becomes profitable (3-5 years?), estimate steady-state cash flows, discount back. (5) Comparable companies: How do global peers trade? Adjust for India market size, growth potential. Key questions: (1) Path to profitability - when will company break even? If never, avoid. (2) Unit economics - is each transaction profitable at gross margin level? (3) Market size - TAM (Total Addressable Market) large enough to justify valuation? (4) Competitive moat - what prevents competition from copying? (5) Funding runway - how much cash left, when need next funding? Risk factors: (1) Valuation compression - when rates rise, unprofitable growth stocks crash first (Paytm -75% from peak), (2) Dilution - continuous fundraising dilutes shareholders, (3) Never profitable - some businesses inherently low-margin. Conservative approach: Wait for profitability before investing. Speculative approach: Small allocation (5-10% portfolio) to few high-conviction new-age stories. Never bet retirement money on loss-making companies regardless of narrative!
Despite usefulness, fundamental analysis has significant limitations: (1) Backward-looking: P/E, P/B based on past data. Future might differ radically (Nokia looked great on fundamentals before iPhone disruption). (2) Accounting manipulation: Creative accounting inflates profits. Satyam showed excellent fundamentals before fraud revealed. Always cross-check with cash flow statements. (3) Intangibles ignored: Brand value, management quality, corporate culture not on balance sheet but crucial for long-term success. Google/Amazon justified expensive valuations through execution. (4) Black swan events: COVID-19 invalidated all 2020 projections. Geopolitical risks, regulatory changes unpredictable. (5) Market timing mismatch: Stock can stay overvalued or undervalued for years. You may be right about valuation but wrong about timing. "Markets can remain irrational longer than you can remain solvent." (6) Sector disruption: Traditional valuations meaningless during disruption. Photography companies looked cheap before digital cameras. Auto companies may face similar with EVs. (7) Macro ignored: Stock fundamentally solid but if market crashes 40% (2008, 2020), your stock falls 30-50% too. Beta, correlation matter. Practical approach: (1) Use fundamental analysis for stock selection, technical analysis for timing, (2) Build margin of safety - buy 30-40% below intrinsic value, (3) Diversify across sectors to reduce company-specific risk, (4) Monitor quarterly results, management commentary for changes in story, (5) Combine with qualitative factors - management integrity, competitive positioning, industry dynamics, (6) Accept uncertainty - even best analysis wrong 30-40% of time. Portfolio approach beats individual stock picking. Remember Warren Buffett principle: "Be fearful when others are greedy, greedy when others are fearful" - sentiment often matters more than fundamentals short-term!
Revaluation frequency depends on investment horizon and strategy: (1) Long-term investors (5+ years): Annual revaluation sufficient. Review after full-year results (May-June for March year-end companies). Check if original investment thesis intact, valuations still reasonable. Don't obsess over quarterly fluctuations. (2) Medium-term investors (1-3 years): Quarterly review aligning with results season (Jan, Apr, Jul, Oct). Monitor if earnings trajectory on track, sector dynamics changing, valuations stretched. (3) Short-term traders (<1 year): Continuous monitoring but not recommended for most retail investors. Requires significant time, expertise, and emotional discipline. When to revalue immediately (regardless of strategy): (1) Major corporate action - merger, acquisition, demerger, rights issue, (2) Management change - new CEO, promoter selling stake, corporate governance issues, (3) Sector disruption - regulatory change, new competitor, technology shift, (4) Earnings shock - results 30%+ different from expectations, margin compression, (5) Macroeconomic shock - COVID-type event, war, major policy change. Process: Don't just recalculate P/E quarterly. Ask: (1) Is business performing as expected? (2) Has competitive position strengthened or weakened? (3) Are valuations justified given current reality? (4) Better opportunities available elsewhere? Example: Bought at 20x P/E expecting 20% growth. One year later, 25x P/E but growth slowing to 10%. Sell even if profit, momentum slowing + valuation stretching = future returns poor. Alternatively: Bought at 20x P/E, now 15x P/E despite on-track execution. Temporary weakness = opportunity to add. Common mistake: Daily checking and overreacting. Creates emotional decisions. Set calendar reminders: Annual deep review, Quarterly result check, Monthly portfolio rebalance if needed (sell outperformers, buy underperformers to maintain allocation). Stick to process, avoid noise between reviews.
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