Calculating a Sector Price-to-Book Ratio from Aggregate Values
Summary
The note asks how a financial data service might aggregate price-to-book ratios across banks in a sector. It lists each company’s market capitalization, individual price-to-book ratio, and book value, and reports a common sector ratio shown for the constituents. The answer describes the aggregate approach: add the securities’ market values and divide by their combined book value.
This is equivalent to a market-cap-weighted average of individual price-to-book ratios when the constituent values are consistently defined, rather than a simple arithmetic or harmonic mean. The document does not show the calculation on its table, explain how the provider selects sector constituents, or specify its treatment of missing or negative book values. Its figures are a snapshot from the cited data source and do not establish a general provider methodology beyond the answer given.
Key ideas
- An aggregate sector price-to-book ratio can be calculated as total market capitalization divided by total book value.
- This aggregate ratio corresponds to weighting constituent price-to-book ratios by market capitalization when inputs are consistent.
- A simple average of constituent ratios does not generally produce the aggregate sector ratio.
- The document does not detail constituent selection or special treatment of problematic book values.
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Full text
# How sector PB ratio is calculated on ticker tape? # How sector PB ratio is calculated on ticker tape? I know what PB ratio is and I am looking forward to calculate the sector PB ratio. Here's the sector PB ratio of State Bank of India is 2.23. Link The names of companies and its corresponding details are given below. Extracted from ticker tape too : link | Names | Market Cap(in Cr) | PB Ratio | Sector PB | Book Value(in Cr) | Current Market Price of each share | | State Bank of India | ₹451,139.11 | 1.58 | 2.23 | ₹285,187.48 | ₹505.50 | | Bank of Baroda Ltd | ₹59,729.23 | 0.72 | 2.23 | ₹82,825.78 | ₹115.50 | | IDBI Bank Ltd | ₹48,654.62 | 1.29 | 2.23 | ₹37,741.02 | ₹45.25 | | Canara Bank Ltd | ₹42,731.84 | 0.68 | 2.23 | ₹63,202.97 | ₹235.55 | | Punjab National Bank | ₹39,199.22 | 0.42 | 2.23 | ₹93,021.13 | ₹35.60 | | Indian Overseas Bank | ₹34,874.95 | 2.06 | 2.23 | ₹16,944.81 | ₹18.45 | | Union Bank of India Ltd | ₹27,509.86 | 0.42 | 2.23 | ₹64,737.77 | ₹40.25 | | Indian Bank | ₹20,182.37 | 0.51 | 2.23 | ₹39,480.67 | ₹162.05 | | Bank of India Ltd | ₹20,169.03 | 0.40 | 2.23 | ₹50,139.54 | ₹49.15 | | Central Bank of India Ltd | ₹16,450.38 | 0.62 | 2.23 | ₹26,547.38 | ₹18.95 | | UCO Bank | ₹14,287.37 | 0.63 | 2.23 | ₹22,606.41 | ₹11.95 | | Bank of Maharashtra Ltd | ₹12,148.55 | 0.99 | 2.23 | ₹12,308.29 | ₹18.05 | | Punjab & Sind Bank | ₹6,565.33 | 0.79 | 2.23 | ₹8,363.02 | ₹16.20 | I tried harmonic mean, arithemetic mean etc on ratio with its market captilisation weight etc.. but couldn't able to get the sector PB value as 2.23. Also, on the website, a little definition is mention for sector PB `sector PB : Market cap weighted-average PB ratio of the sector the stock belongs to` Could anyone help me to understand how this sector PB is evaluated? ## Answer by Mahesh Nathwani (score 1) https://quant.stackexchange.com/a/71044 The sector PB ratio is in Tickertape is calculated using Sum of all the securities in the sector divided by the sum total of the book value of those securities. You can refer the support docs
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