PE = Price ÷ EPS. If a stock trades at ₹200 and its EPS is ₹10, PE = 20. That means you're paying ₹20 today for every ₹1 the company earns each year.
A low PE can mean the stock is cheap — or that the market thinks earnings are about to fall. A high PE often means investors expect fast growth. Neither is automatically good or bad.
Always compare PE within the same sector. IT companies often trade at PEs of 25–35, while banks and cement makers usually sit at 10–20. Comparing across sectors is misleading.
Rough rule of thumb: for a stable Indian large-cap, PE between 15 and 25 is normal. Above 40 usually requires strong growth to justify.