Calculate Price-to-Book Value ratio for asset-based stock valuation
Book Value = (Total Assets - Total Liabilities) / Shares Outstanding
P/B Ratio
2.00x
Moderate premium - Quality business or sector leader
Market Price
₹500
Book Value
₹250
📈 Stock trading at 100.0% premium to book value
• P/B < 1: Trading below net assets - value opportunity or red flag
• P/B 1-2: Fair valuation for mature businesses
• P/B 2-4: Premium for quality or growth
• P/B > 4: High expectations or asset-light model
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The P/B (Price-to-Book) Ratio Calculator helps evaluate a stock's market value relative to its book value (net asset value). Book value represents the company's assets minus liabilities as shown on the balance sheet. A P/B ratio below 1 suggests the stock is trading below its net asset value, which could indicate an undervalued opportunity or financial distress. This metric is particularly useful for valuing banks, insurance companies, and capital-intensive businesses.
For value investors, P/B below 1 is attractive as you're buying assets at a discount. However, 'good' P/B varies by industry. Banks typically trade at 1-3x, while tech companies may have P/B of 5-15x due to intangible assets. Always compare with industry peers.
Asset-light businesses (software, services, pharma) have high P/B because their value comes from intellectual property, brand, and human capital, which aren't fully reflected in book value. A high P/B indicates the market values the company's earnings power over its tangible assets.
P/B ratio is most useful for capital-intensive businesses (banks, insurance, manufacturing, real estate). It's less relevant for asset-light companies like IT services or pharma where intangible assets and intellectual property drive value.
P/B below 1 could mean: (1) Undervalued opportunity - market undervalues assets, (2) Distressed company - assets may be impaired or business struggling, or (3) Declining industry. Investigate why before assuming it's a bargain.
P/E measures price relative to earnings (profitability), while P/B compares price to net assets (balance sheet). P/B provides downside protection view, while P/E shows earnings potential. Use both together for comprehensive analysis.