For Buying stocks, valuation is very important whether is this company worth to buy at this rate and most of the people use PE ratio (Price to Earnings).
This PE ratio indicates how many years our buying stock and company will generate income.
For Example, Today Adani enterprises P/E ratio is 300 & 2300 rupees per share. So, it will take 300 years to earn 2300 rupees per share.
But you can’t just look at low PE companies to buy stocks.
It does not matter whether the PE ratio is 20/30. For that we need to look at the sector and also, we can compare our company’s PE with industry PE.
If you look at 30 things on the balance sheet when we buying a stock, this PE ratio is one of them.
We are going to write and send the other ratios every two weeks.