What is the Price-to-Earnings (P/E) Ratio?

The P/E ratio compares a company's share price to its annual earnings per share (EPS). A P/E of 25 means investors pay ₹25 for every ₹1 of earnings. A high P/E suggests growth expectations; a low P/E may indicate undervaluation or poor prospects. Always compare P/E within the same sector.