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    P/E Ratio — Price to Earnings Formula

    The Price-to-Earnings ratio is the most widely used valuation metric for stocks. It tells you how much investors are willing to pay for each rupee of earnings.

    Price-to-Earnings Ratio

    P/E Ratio = Market Price per Share / Earnings per Share (EPS)

    Where:

    • P = Current market price of one share
    • EPS = Earnings per share (net profit / total shares)

    Step-by-Step:

    1. 1

      Find current share price

      Look up the stock on NSE/BSE.

    2. 2

      Find EPS

      Net profit divided by total outstanding shares. Use TTM (trailing twelve months) EPS.

    3. 3

      Divide

      P/E = Price / EPS.

    Worked Examples:

    Stock valuation

    Price: ₹500EPS: ₹25

    Result: P/E = 20

    500 / 25 = 20. Investors pay ₹20 for every ₹1 of earnings.

    Frequently Asked Questions