What is a good PE ratio for Indian stocks? Sector medians, updated daily
There is no single “good” PE ratio. A PE of 25 is expensive for a steel maker and cheap for a fast-growing software company. The useful question is how a company’s PE compares with its own sector and with the quality of its profits.
What the PE ratio tells you
The price-to-earnings ratio is the share price divided by earnings per share. It is the number of rupees you pay today for one rupee of the company’s yearly profit. A PE of 20 means that, if profits stayed flat, it would take 20 years of earnings to add up to what you paid.
Across Indian companies worth more than ₹5,000 crore, the median PE today is 35x. Smaller companies pull the medians below down, because many trade at lower multiples. Sector medians across companies of every size, rebuilt every day, look like this:
| Sector | Median PE | Median ROCE | Median debt/equity | Companies |
|---|---|---|---|---|
| Communication Services | 12.2x | 7% | 0.12x | 190 |
| Financials | 13.2x | 3.4% | 0.07x | 687 |
| Real Estate | 13.6x | 5.4% | 0.27x | 228 |
| Consumer Staples | 15.2x | 12.5% | 0.31x | 417 |
| Energy | 15.7x | 13.1% | 0.32x | 50 |
| Utilities | 16.4x | 11.6% | 0.44x | 112 |
| Materials | 16.7x | 11.1% | 0.32x | 879 |
| Consumer Discretionary | 17.4x | 11.1% | 0.31x | 1019 |
| Information Technology | 18x | 12.1% | 0.13x | 390 |
| Industrials | 18.8x | 13.3% | 0.26x | 1257 |
| Health Care | 26.1x | 12.7% | 0.2x | 354 |
Why sectors trade at such different PEs
Investors pay more for profits that are expected to grow for longer and swing less. Today Health Care and Industrials carry the highest median PEs, while Communication Services and Financials carry the lowest. Businesses whose profits rise and fall with the economy and interest rates, such as lenders, property developers and commodity producers, usually trade at lower multiples than those with steady demand and little debt.
Four checks before you trust a low PE
- Is the profit real and repeatable? A one-off gain can make PE look cheap for a year.
- Is return on capital healthy? A low PE with a ROCE below 10% often means the market doubts the business.
- How much debt is there? Compare debt to equity with the sector median above.
- Is the promoter pledging shares? High pledging can force selling in a downturn.
On each company page, DecideChart puts the PE next to the sector median and marks it Better, In line or Weaker, alongside ROCE, debt and growth. That shows at a glance whether a low PE is a bargain or a warning.
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DecideChart is an AI-based research tool from Akshay Lakshay Kotish Private Limited. It is not linked to SEBI, BSE or NSE and does not give investment advice. Figures come from open market data and can lag company filings.