Low Price to Book Stocks in India

As per Equitymaster's Stock Screener, here is a list of the best low price to book (PB) value stocks in India right now...

• #1 ONGC
• #2 BANK OF BARODA
• #3 PNB
• #4 IOC
• #5 HINDALCO

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.

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.

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.

A low price-to-book ratio could indicate that a stock is undervalued. This is especially true if the stock's book value is less than one as it creates a "margin of safety" for investors.

However, a very low PB ratio can also be a sign of trouble at a company, so it should be used as part of a thorough stock analysis.

As per the tenets of value investing, any value under 1 is considered a good value. However, investors often consider stocks with a PB ratio of under 3.

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.