Which are the best stocks below book value in India right now?
As per Equitymaster's Stock Screener, here is a list of the best stocks below book value in India right now...
Generally, speaking, low PB stocks are considered to be undervalued stocks. And high PB stocks are said to be expensive.
Of course, there are other parameters you should take into account before forming a hard opinion on the stock valuation.
What is the price to book value ratio?
The Price to Book Value (P/B) ratio is a valuation ratio that is used to determine whether a stock is undervalued or overvalued.
It compares the company's stock price with its book value per share.
How is the PB ratio calculated?
The PB ratio is calculated by dividing the stock price by the company's book value per share.
PB Ratio = Stock Price/Book value per share
Watch this for a detailed explanation of the PB Ratio.
What are the other important parameters to consider when looking at valuations?
One popular ratio, other than PB, is the Price to Earnings ratio (P/E). This compares the stock price with the earnings per share. You can access a list of the most attractive stocks based on P/E here...
EV to EBITDA (Enterprise Value to Earnings before interest, taxes, depreciation and amortization) ratio is also another popular ratio used in the valuation of service companies or companies that are yet to turn profitable.
The thumb rule is that a company with lower EV/EBITDA is more attractive.