Value investing on the NSE starts with understanding the P/E and P/B ratios. This guide shows you how to use the P/E P/B ratio NSE value screener to find fundamentally strong stocks trading at a discount. Learn the ideal thresholds and a repeatable screening process.

15-20

Ideal P/E Range

<1.5

Ideal P/B Range

15%+

Minimum ROCE

5%+

Minimum Dividend Yield

Why P/E and P/B Ratios Matter for Value Investing

The P/E ratio tells you how much the market is willing to pay for each rupee of earnings. A low P/E (below 15-20) often signals an undervalued stock. Combine it with the P/B ratio to check if the stock's market price is less than its book value — a classic value indicator. For deeper context, explore our techno-fundamental CANSLIM guide for combining ratios with technicals.

Using both ratios together filters out value traps. A low P/E alone might indicate a declining business, but a low P/B suggests the stock is cheap relative to its assets. When both are low and the company has strong fundamentals (ROCE >15%, low debt), you have a solid value candidate.

📌 Key Insight
The sweet spot for NSE value stocks is a P/E between 10-20 and a P/B below 1.5, combined with consistent earnings growth and a dividend yield above 3%.

How to Screen NSE Stocks Using P/E and P/B Ratios

Set P/E Threshold — Filter stocks with a P/E ratio between 10 and 20. This range captures most value opportunities without including distressed companies.

Set P/B Threshold — Add a P/B ratio filter below 1.5. A P/B under 1.0 is even stronger but may be rare; under 1.5 is a practical value threshold.

Check Earnings Stability — Ensure the company has positive earnings per share (EPS) for the last 3-5 years. Avoid stocks with negative or volatile earnings.

Use QUANTSCASE Screener — Apply these filters in the Fundamental Value Picks screener to get a list of NSE stocks meeting your criteria.

Verify with ROCE & Debt — Confirm a Return on Capital Employed (ROCE) above 15% and a debt-to-equity ratio below 1. This ensures the company uses capital efficiently and is not overleveraged.

💡 Pro Tip
Sort your filtered list by dividend yield descending. A high yield (5%+) combined with low P/E and P/B often signals a mature, undervalued company with shareholder-friendly management.

Key Indicators for P/E and P/B Screening

Indicator	Threshold	Signal	Why It Matters
P/E Ratio	10-20	✅ Bullish	Indicates the stock is undervalued relative to earnings.
P/B Ratio	<1.5	✅ Bullish	Stock price is below book value, suggesting a margin of safety.
ROCE	>15%	✅ Bullish	Company generates strong returns on invested capital.
Debt-to-Equity	<1	⚡ Watch	Low debt reduces financial risk; above 1 may indicate leverage.
Dividend Yield	>3%	✅ Bullish	Provides income and signals management confidence.
P/E > 30	>30	❌ Bearish	Overvalued unless high growth justifies the premium.

✅ Value Stock Entry Checklist

✓P/E ratio between 10 and 20

✓P/B ratio below 1.5

✓Positive EPS for the last 3 years

✓ROCE above 15%

✗Avoid stocks with negative net income or declining revenue

⚠️ Common Mistake
A low P/E and P/B can also be a value trap if the company has declining earnings or high debt. Always check the full financial health before investing.

Try It on QUANTSCASE

Use the Fundamental Value Picks screener to apply these filters instantly. You can also combine with momentum or volume indicators for a more robust strategy.

Fundamental Value Picks →

Screen NSE stocks by P/E, P/B, ROCE, and dividend yield.

Techno-Fundamental CANSLIM →

Combine value ratios with technical momentum signals.

Screen 1,800+ NSE Stocks Instantly

Start Your Value Screening Now

Try the Value Screener — 1,800+ NSE Stocks

This guide is for educational purposes only and does not constitute financial advice. Always do your own research before investing.