NISM Certifications · NISM-Series-XV: Research Analyst · Valuation Principles
A company reports net profit of ₹90 crore, has 6 crore shares outstanding, and its shares trade at ₹180. Its book value of equity is ₹540 crore. What are its P/E ratio and P/B ratio respectively?
The P/E ratio is 12 and the P/B ratio is 2. EPS is ₹15 (90 crore divided by 6 crore shares), so P/E is 180 divided by 15. Book value per share is ₹90 (540 divided by 6), so P/B is 180 divided by 90.
- A12 and 2
- B12 and 3Correct
- C2 and 12
- D15 and 3
Explanation
EPS = 90/6 = ₹15. P/E = 180/15 = 12. Book value per share = 540/6 = ₹90. P/B = 180/90 = 2. So P/E is 12 and P/B is 2; recheck option mapping: the pair 12 and 2 is correct.
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