How to read financial metrics

Comparing a single quarter’s profit to price or equity can mislead. TTM puts earnings and related ratios on a more annual, comparable footing.

Treat TTM as the best available annual-style snapshot, not a forecast. It can lag when a new quarter’s consolidated filing arrives after the standalone one. Prefer comparing TTM figures across peers and over time rather than reading one number in isolation.

Price is the market’s current quote and the starting point for every valuation multiple (P/E, P/B, yield, and so on).

A single close says little on its own. Look at price alongside earnings, book value, and peers—and prefer adjusted history when comparing across stock splits, bonus shares, or other corporate actions.

It sets company size for peer comparison and is the equity side of enterprise value. Larger caps often trade differently from smaller ones.

Use market cap to group peers by size. It moves with price and can jump after share issuances or buybacks; it is not the same as the value of the whole firm (see enterprise value).

It's the bottom number in ROE and debt/equity calculations, and the bridge between accounting book value and market multiples like P/B.

Book equity can lag economic reality — things like brand value or revalued property aren't always captured. Prefer owner’s equity when consolidated. Very low or negative equity makes return and leverage ratios hard to interpret.

It gives a fair “typical” reading for the industry. Averages can be pulled around by one extreme company; the median is more robust for comparing a stock to its sector.

Use sector medians as context, not a buy/sell rule. A company below median P/E may look cheap—or may deserve a discount. Compare the same metric across peers and over time, and remember sector boundaries follow our industry taxonomy used in Find stocks.

It sketches how large a “typical” company in the group is, which helps when reading valuation and growth in context of scale.

Large gaps between a company’s revenue and the sector median often mean different business models or life stages within the same taxonomy leaf. Pair with market-cap and margins, not revenue alone.

It anchors P/B and helps you see how much of the market price is above or below reported net assets.

Asset-heavy businesses often trade nearer book; growth or brand-heavy firms often trade far above. Compare BVPS trend and P/B to peers in the same sector.

A lender can sell pledged shares if the loan goes bad or the share price falls far enough, so a high pledge can mean forced selling and a change in control.

Zero or low is normal. A high or rising pledge is a caution flag, more so when the share price is falling. The figure below it is the change in percentage points against the same quarter a year earlier.

EV is the right firm-level price for multiples like EV/EBITDA, because it reflects both equity and debt claims on the business.

Rising EV can come from a higher share price or more net debt. Prefer EV multiples when comparing companies with different leverage. EV needs debt and/or cash on the balance sheet to compute.

It is the most common valuation check: whether the market is paying a rich or cheap multiple of current earnings power.

High P/E is not automatically “expensive”—it can reflect growth expectations or temporarily low earnings. Low P/E can mean the stock is cheap — or that the market expects trouble ahead. Always compare to the company’s history and sector peers, and watch for one-off profits that inflate EPS.

Useful for banks, NBFCs, and businesses that need a lot of property or equipment, where book value is a meaningful reference. Less useful when a company's main assets are things like brand value or patents rather than physical property.

P/B below 1 can mean the market doubts asset quality or earning power—or a bargain. Above-peer P/B needs stronger ROE or growth to justify. Read with ROE: high P/B with weak ROE is a caution flag.

Two banks with the same P/B can be very different if one is sitting on bad loans: its real book is smaller. In 2018–19 several public sector banks had net bad loans larger than their whole book.

Close to P/B when bad loans are small (most banks today); well above P/B when they are large. When net NPA exceeds the book the page says “Bad loans exceed book” instead of a number.

A life insurer's book value leaves out the future profit locked in its existing policies, so P/B makes it look expensive. Embedded value counts that profit; P/EV shows what the market pays on top of it for the business still to be written.

Close to 1 means the market pays little for future growth; well above 1 means it expects the insurer to keep writing profitable new business (see VNB margin). Embedded value is published once or twice a year, so the date beside the figure says which one it is on.

Helpful when profit is unpredictable, negative, or not yet meaningful (early-growth companies, or a weak point in the business cycle), while sales are still comparable.

Lower P/S can look cheap, but thin or negative margins can make “cheap sales” worthless. Prefer peers with similar business models and check margin trends alongside P/S.

It lets you compare companies with different debt levels and depreciation policies more cleanly than a simple P/E.

Lower multiples can look attractive in capital-heavy sectors, but high capex needs can still drain cash. How much the company spends on equipment and property (capex), working capital needs, and interest costs still matter—pair with free cash flow and debt levels.

Unlike EV/EBITDA, it includes depreciation, so it better reflects how equipment-heavy the business is when depreciation is large and recurring.

Useful alongside EV/EBITDA: a big gap between the two often signals heavy depreciation (asset-heavy model). Still compare within sector and with leverage.

It expresses earnings as a percentage, making it easier to compare with bond yields or other expected returns (it's not a forecast of cash you'll actually receive).

Higher yield can mean cheaper earnings or riskier/lower-quality earnings. Read with growth, leverage, and cash conversion—not as a standalone “buy” signal.

It shows the income component of return for dividend-paying stocks. Many growth companies intentionally keep yield near zero.

A high yield can be sustainable cash return—or a falling price with an unsustainable payout. Check how much of profit is paid out as dividends, how stable earnings are, and whether the company typically pays once or twice a year rather than every quarter.

It is a core check of capital efficiency for equity holders: whether the business earns an attractive return on the capital owners have in the books.

High ROE is attractive when driven by strong operations, not only by thin equity or heavy debt. Pair with debt/equity and ROCE. Compare to sector norms—software ROE profiles differ from utilities or banks.

It answers whether the firm earns a good return on all long-term capital, not just equity—useful when companies use different mixes of debt and equity.

A ROCE that beats what shareholders and lenders expect in return (its “cost of capital”) roughly means the business is creating value over time. Rising ROCE with stable or falling leverage is usually healthier than ROE boosted only by more debt. How much equipment or property the sector needs to operate matters a lot.

It shows core operating profitability before interest and tax. Useful for comparing cost discipline and pricing power within an industry.

Higher OPM is usually better, but asset-light software companies and equipment-heavy industrial companies have very different “normal” levels. Watch the trend and the sector median together. A one-off gain can temporarily inflate margins.

It folds in interest, tax, and non-operating items that OPM leaves out, so it reflects what equity holders ultimately earn on sales.

Large gaps between OPM and net margin can point to high interest, tax, or other below-the-line items. Compare within sector; banks and NBFCs need different margin frameworks than manufacturers.

Borrowing money amplifies both returns and risk. High D/E means earnings and equity value are more sensitive to interest costs and economic downturns.

“Good” levels are sector-specific (utilities and NBFCs carry more debt by design). Rising D/E with falling interest coverage is a caution. Very low D/E can mean the company is cautious about debt—or simply isn't using leverage it could to grow faster.

Lenders and credit analysts use it as a quick check of how much debt a company carries and how easily it could repay it. A high ratio can limit the company's freedom to invest or borrow more, and raise the risk of trouble refinancing loans later.

Higher multiples mean more leverage versus earnings. Negative net debt (net cash) is usually comfortable. Cyclical troughs can temporarily spike the ratio—look at the trend and interest coverage together.

It is a quick liquidity check: whether near-term obligations look covered by near-term assets.

Around or above 1 is often comfortable, but inventory-heavy businesses can look liquid on paper while cash is tied up. Very high ratios can mean idle cash or slow collections. Read with cash conversion cycle and operating cash flow.

Longer collection cycles lock cash in working capital and can signal that customers are struggling to pay, or that the company is booking sales before it actually collects the cash.

Compare to peers and the company’s own history. Rising debtor days with flat sales is a caution. B2B and project businesses naturally run higher days than cash retail.

Excess inventory ties up cash and risks having to sell it later at a discount; too little can mean lost sales. Manufacturing and retail live or die by this number.

Rising inventory days into a soft demand cycle is a red flag. Service and software firms often show little or no inventory—don’t force peer comparisons across models.

Paying later can fund working capital; paying too aggressively may strain supplier relationships. Extreme stretch can signal cash pressure.

Rising payables days can be smart negotiation or delayed stress—check cash levels, how easily the company covers its interest payments, and how dependent it is on a few key suppliers. Compare within the same industry supply chain.

Shorter cycles free cash for growth, debt reduction, or dividends. Longer cycles increase funding needs even when the profit and loss statement looks fine.

Negative CCC (payables fund the cycle) can be a strength in retail/distribution—or fragile if suppliers tighten terms. Track the trend and the three components separately when CCC moves.

Profit can sit in unpaid customer bills or unsold stock. A company that keeps converting most of its EBITDA into cash can fund growth, dividends and debt repayment itself; one that does not needs outside money even while it reports profits.

Around 75–90% is typical for a healthy company, because operating cash flow is after tax and EBITDA is before it. Above 100% usually means customers paid in advance or working capital was released. One year can swing on the timing of a large payment, so read the 3-year figure for the trend. It varies by sector: project and engineering businesses run lower than utilities or consumer companies. Real estate developers swing with land purchases and customer advances, and a group with a lending arm (in its consolidated figures) with that arm's loan book, so read those with care. n.m. (not meaningful) means EBITDA was under 3% of revenue, too thin a base for the ratio. Not shown for banks, lenders, insurers and other financial services companies, whose operating cash flow carries loans, premiums or client money, or when EBITDA is zero or negative.

Several banks report these as zero or blank in their consolidated results even when the standalone results have the real figures, since the ratio simply isn't meaningful at the group level. Always showing the standalone number avoids a misleading zero.

If you want a subsidiary's own regulatory position (e.g. a bank's NBFC arm), look up that subsidiary directly — it won't show up folded into the parent's consolidated ratios here.

It's the headline measure of asset-quality stress in a bank's loan book — rising gross NPA signals more borrowers falling behind.

Look at the trend and at Gross NPA % (relative to total advances) rather than the absolute rupee figure alone, since bigger banks naturally carry bigger absolute NPA.

It normalizes NPA for the size of the loan book, making it comparable across banks of very different scale.

Lower is generally better. Compare to peers of similar loan mix (retail vs corporate-heavy banks run at different “normal” levels) and watch the trend more than any single quarter.

It shows how much bad-loan risk is still uncushioned by provisioning, which matters more directly for capital than the gross figure.

A large gap between gross and net NPA usually means the bank is provisioning conservatively (a positive sign); a small gap can mean thinner cushioning.

It's the asset-quality figure regulators and analysts watch most closely for capital-adequacy implications, since it's the exposure not yet cushioned.

Compare to the bank's own history and to peers with a similar lending mix; a rising Net NPA % alongside falling provisioning coverage is a caution sign.

It's the core measure regulators use to judge whether a bank has enough of a buffer to absorb losses before it becomes distressed.

Regulatory minimums apply (RBI requires a floor plus buffers); comfortably above minimum is generally reassuring, and a falling trend toward the floor is worth watching.

Together with CET1 and Tier 2 capital, it feeds into the overall Capital Adequacy Ratio regulators require banks to maintain.

Read alongside CET1 and overall Capital Adequacy Ratio rather than in isolation — AT1 alone doesn't tell you the bank's total buffer.

It's the single most-watched regulatory solvency number for a bank — the buffer available to absorb unexpected losses.

Compare to RBI's required minimum and to peers; comfortably above minimum with a stable or rising trend is the healthiest pattern.

It shows how efficiently the bank turns its balance sheet into interest income after funding costs — the engine behind most of a bank's earnings.

Higher NIM is generally better, but very high NIM can also reflect a riskier loan mix (higher-yield, higher-risk lending). Compare within similar bank types (retail-heavy vs wholesale-heavy).

Because banks are highly leveraged, ROA is often a more meaningful profitability yardstick across banks than ROE, which can be inflated by leverage alone.

Even a small-looking ROA (well under 2%) can be healthy for a bank, given how much of its balance sheet is other people's deposits. Compare within the banking sector, not against non-bank ROE norms.

It shows how profitable the business being written today is. Selling more policies at a thin margin adds little value; a higher margin usually means more protection and less savings business.

Compare with other life insurers and the company's own history. Indian private life insurers mostly report margins in the 15–30% range; a rising margin is a sign of a richer product mix.

A life policy earns its profit over many years; a policy that lapses after one year rarely pays back what it cost to sell. Low persistency often points to mis-selling.

Higher is better. Large private life insurers report roughly 80–90%; a falling figure is worth watching.

It shows whether the insurance business itself makes money before investment income. Above 100% the insurer pays out more than it earns in premium and relies on its investments to make a profit.

Lower is better. Many Indian general insurers run a little above 100% and earn their profit on investments; a ratio well above peers is a warning sign.

It is the core of underwriting: how much of each premium rupee goes back to policyholders as claims.

Too high and the insurer loses money on its policies; very low can mean it is pricing aggressively or paying claims slowly. Compare within the same lines of business (health, motor, crop).

It is the insurer's cushion for claims larger than expected. A low ratio can force the insurer to raise capital or slow down its growth.

IRDAI's minimum is 150%. Comfortably above it is reassuring; a ratio drifting toward 150% often comes before a capital raise.