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6️⃣Let's take an example: HDFC Bank vs Yes Bank As of recent years: 📊HDFC Bank → ROE ~17%, P/B ~3 📊Yes Bank → ROE < 5%, P/B ~1 The market pays a premium for consistency, trust, and governance 👉Both are “banks” — but the difference in valuation tells a story

4️⃣What influences a Bank’s P/B ratio? A higher P/B isn’t always bad. It may mean: 🔷Higher ROE (Return on Equity) 🔷Better asset quality (low NPAs) 🔷Strong CASA base (cheap funds) 🔷Brand trust & management quality 🔷Future growth visibility 👉In simple terms: You pay more https://t.co/1pfPh5JuST

8️⃣What to look for when analyzing a bank? Use this combo: → P/B Ratio → ROE (Return on Equity) → NIM (Net Interest Margin) → GNPA & NNPA (Asset quality) → CASA Ratio (Cost of funds) → Loan growth & provisioning trends A low P/B with poor ROE is a trap A high P/B with

Bonus tip: Read the book "The Little Book of Valuation" by Aswath Damodaran https://t.co/LPAl5nAVSB

3️⃣Why not use P/E Ratio like other sectors? Banks are not product companies. Their inventory = money. 🔷Earnings (used in P/E) are often volatile due to provisioning norms, NPAs, and credit cycles 🔷Book Value is more stable & reflects long-term franchise value 🔷P/E can

And that’s a wrap! If you're into banking stocks, understanding P/B is non-negotiable. It’s your X-ray into a bank’s true value. Retweet this to help others understand this underrated metric!

7️⃣What’s an ideal P/B to look for? There’s no magic number — but here’s a framework: 🔹 Large Private Banks: P/B of 2–4 (with strong ROE) 🔹 PSU Banks: P/B of 0.5–1.5 (due to inefficiencies) 🔹 Small Finance / NBFCs: Highly variable — watch for NPAs & capital adequacy 👉Always

5️⃣How to interpret it with Return on Equity (ROE)? This is the sweet spot — combining P/B with ROE 🔷High ROE + Low P/B = Undervalued gem 🔷Low ROE + High P/B = Risky valuation 🔷High ROE + High P/B = Market confident in future A bank with ROE > 15% can justify a P/B > 2 But

2️⃣What is Price-to-Book (P/B) Ratio? P/B = Market Price per Share / Book Value per Share 🔷Book Value = Assets - Liabilities (i.e. shareholder's equity) 🔷In banking, assets are mostly loans, and liabilities are deposits 🔷So, Book Value = Net worth of the bank 🔷P/B tells you