Understanding P/E Ratio – What Retail Investors Often Miss

P/E Ratio (Price-to-Earnings) is one of the most used — and most misunderstood — valuation metrics. 🔹 P/E = Current Market Price / Earnings Per Share (EPS) A high P/E is not always expensive, and a low P/E is not always a value buy. ✅ What really matters is: Growth Rate vs P/E → Check PEG Ratio (P/E ÷ EPS growth) Compare P/E within the same sector Is the P/E justified by future earnings visibility? 📌 Example: ITC had a low P/E for years — but lacked growth triggers DMart trades at high P/E — but has strong RoCE, earnings growth, and market dominance 🧠 Pro Tip: P/E is just one part of valuation. Combine it with debt ratios, RoE, free cash flow, and sector context for meaningful analysis