P/E Ratio (Price-to-Earnings) — Mutual Fund Term Explained

Mutual fund portfolio advisor · BBA, Sarvajanik University

Published 28 Jun 2026 · Updated 28 Jul 2026

How much investors pay for each rupee of company earnings. High P/E = expensive valuation; low P/E = potential value.

The P/E ratio is market price divided by earnings per share. A Nifty 50 P/E of 20x means investors pay ₹20 for every ₹1 of earnings.

P/E is used by balanced advantage funds to determine equity allocation.

Formula

P/E = Market Price per Share ÷ Earnings per Share

P/B Ratio (Price-to-Book) — Market price divided by book value per share. Below 1.0 means the stock trades cheaper than its asset value.
Balanced Advantage Fund (BAF) — An equity-debt hybrid that dynamically adjusts allocation based on market valuations — reducing equity when expensive, increasing when cheap.

Browse the full mutual fund glossary, or see this concept in action in the fund screener.