EPS, P/E ratio and book value in Nepal: reading a company's report

Three numbers do most of the work when people in Nepal ask whether a share is cheap. EPS (earnings per share, प्रतिसेयर आम्दानी) is the company's profit for each share. P/E (price to earnings, मूल्य–आय अनुपात) is the share price divided by that profit. Book value per share (प्रतिसेयर नेटवर्थ, किताबी मूल्य) is what the accounts say each share owns.

This page works each of them, and the ratios around them, from one real report: Everest Bank's for the first quarter of 2083/84, Shrawan 1 to Ashwin 31, 2083 (mid-July to mid-October 2026). Everest is used because its full report is on its website and its numbers show every trap at once. It is an example of the arithmetic, not a recommendation.

Every company listed on NEPSE publishes an unaudited report for each quarter of Nepal's fiscal year, which runs from mid-July. The quarters end at Asoj end (mid-October), Poush end (mid-January), Chaitra end (mid-April) and Asar end (mid-July). The report goes to SEBON within 30 days of the quarter's end, appears in a national daily, and is posted on the company's own website; ShareSansar and similar sites repost the figures. By 3 November 2026 all 20 commercial banks had published their first-quarter reports for 2083/84.

Everest Bank's runs to 18 pages. Its figures are in thousands of rupees ("Fig. in NPR '000"), so its profit line of 1,252,719 means Rs 125.27 crore. These are the parts, and the page each sits on:

• Page 1, the balance sheet (statement of financial position): what the bank owns and owes, beside the last year-end.
• Page 2, profit or loss: income, costs, provisions and tax, beside the same quarter last year, ending in EPS.
• Page 4, changes in equity: the reserves, and any bonus shares and cash dividend paid.
• Page 5, ratios as per NRB directive: capital adequacy, NPL, CD ratio, spread, ROE, net worth per share, the price.
• Page 6, cash flows; page 7, distributable profit, which banks must add.
• Pages 8–18, notes: accounting rules, management's view, legal cases and the quarter's trading record.

EPS is net profit divided by the number of ordinary shares. Everest's paid-up capital is Rs 1,440.74 crore, and at Rs 100 a share that is 14,40,74,450 shares. Its profit for the quarter was Rs 125.27 crore. Divided out, each share earned Rs 8.69 in those three months.

The report prints Rs 34.78, because it multiplies the quarter by four to give a yearly figure. That is annualised EPS, and nearly every Nepali quarterly report prints it: a half-year's profit is doubled, nine months' is multiplied by four-thirds. Everest's first-quarter report labels the line simply "basic earnings per share"; its third- and fourth-quarter reports add a line called "annualized basic earnings per share". Read the label, and check by dividing profit by shares yourself.

"What is a good EPS?" has no answer on its own, because EPS depends on how many shares a company has: the same profit over twice the shares gives half the EPS, and the price adjusts to match. Compare EPS with the company's own past, adjusted for bonus shares (below); with its sector, where commercial banks averaged Rs 17.87 annualised in this quarter (ShareSansar); and with its price, which is what P/E does.

Annualising assumes every quarter earns the same. Everest's own 2082/83 shows they do not. Its four quarters earned Rs 117.93 crore, Rs 93.78 crore, Rs 121.22 crore, Rs 175.01 crore: the fourth was the biggest by far. Annualised on the same share count, the first quarter forecast an EPS of Rs 34.38 for the year and the half-year Rs 30.86; the audited year came out at Rs 37.02. The first quarter was 7.1% short, the half-year 16.6%.

It can go the other way: a quarter with a one-off gain or released provisions annualises into a year the company will not have. Hydropower quarters differ by season, so none of them times four describes a year.

The better yearly figure is TTM EPS (trailing twelve months): the last four quarters' actual profit. For Everest that is the last three quarters of 2082/83 plus this one, Rs 515.29 crore, or Rs 35.77 a share. The table under the chart gives the three EPS figures that can honestly be quoted for the same bank on the same day.

Everest's report shows EPS falling from Rs 36.44 in last year's first quarter to Rs 34.78, a drop of 4.6%. Its profit rose 6.23% over the same quarter. The difference is bonus shares: a 6% bonus during 2082/83 and a 5% bonus this quarter raised the number of shares by 11.3%. The same profit spread over more shares gives a smaller EPS, with nothing changed in the business.

To compare, put last year's profit on today's shares: Rs 117.93 crore × 4 ÷ 14,40,74,450 = Rs 32.74, the bonus-adjusted EPS. Against that, this year's Rs 34.78 is up 6.2%, the same as profit. The accounting standard restates earlier EPS this way after a bonus issue; Nepali quarterly summaries usually print the old figure unchanged, as this one does.

P/E is the share price divided by EPS. Everest's price at the quarter's end was Rs 719, and Rs 719 ÷ Rs 34.78 = 20.67, which the report prints too. Read it as time: someone paying Rs 719 is paying for about 20.7 years of the bank's present profit per share.

That reading shows why P/E is a statement about the future. If Everest's profit grew 10% a year, it would add up to the price in 11.8 years. If it shrank 5% a year, all of it would add up to Rs 695.60 and never reach the price. A high P/E is the market betting on growth; a low one is the market doubting it, or a cheap share. The P/E alone cannot tell you which.

Turned upside down, P/E is the earnings yield: 1 ÷ 20.67 = 4.84%, the profit behind each rupee of the price. A fixed deposit paid 4.01% at the average bank's best rate in Kartik 2083, 3.77% after the 6% tax. They are not alike: a deposit's interest is fixed and paid to you; most of a company's profit stays in the company, and can fall.

There is no single good P/E. It depends on how fast and how safely profit can grow, what deposits pay and what the sector trades at. Benjamin Graham, the teacher of value investing, set 15 as the most a careful investor should pay; in July 2026 only Nepal's commercial banks, at a median of 18.7, were near it. The table puts the question into numbers. The P/E is itself the years of flat profit the price pays for; beside it are the years if profit grows 10% a year, the earnings yield, and the yearly growth that would make 15 years of profit add up to the price.

So a P/E of 12 is cheap if the profit is steady and real, and a warning if it is about to fall. A P/E of 40 needs profit to grow about 13% a year for 15 years just to earn back the price; the hydropower median of 64.0 needs about 19%. A few companies manage that; most do not.

A P/E means most beside others in the same business. ShareSansar worked out the median P/E of every NEPSE sector at the prices of 16–17 July 2026, using annualised third-quarter EPS for 2082/83. Commercial banks were the lowest at 18.7; non-life insurers the highest at 107.6. The whole market's median, across the 226 companies with a valid ratio, was about 54.

For "the P/E of hydropower in Nepal", the median was 64.0, but 24 of the 110 hydropower companies were making losses and are not in it, so the typical hydropower share was dearer than the figure suggests. Hotels and tourism had no median at all: 6 of its 8 companies were loss-making.

ShareSansar put the whole market's P/E at 38.32 on 28 October 2025, on the fourth-quarter accounts of 2081/82, against a historical average of 31.25 and a past peak of 42.28. Its July 2026 count gave a median company P/E of about 54.

Both can be right. A market P/E divides all the companies' value by all their profit, so the biggest, mostly banks with low P/Es, weigh most. A median takes the middle company of a list whose largest group is hydropower, with high P/Es. ShareSansar does not state its method for the first figure, so treat the two as signs of level, not one series. A P/E "today" changes with every trade: data sites such as ShareSansar show live ones, and this page prints none.

P/E works only when profit is real, positive and repeatable. Four cases from the first quarter of 2083/84 show where it breaks:

• Losses. Agricultural Development Bank's annualised EPS was negative, giving a P/E of −55.59; Sindhu Bikas Bank's was minus Rs 11.15, a P/E of −9.39. A negative P/E is not cheap: it means there is no profit to pay for.
• Tiny profits. Excel Development Bank earned an annualised Rs 1.28 a share, so its P/E was 449.43. A small change in profit would halve or double that.
• Where the profit came from. Everest's profit rose Rs 7.34 crore on last year's quarter. Before tax, its loan-loss charge fell by Rs 18.96 crore and trading income rose by Rs 10.24 crore, while net interest income, its main business, fell by Rs 3.25 crore and staff costs rose by Rs 13.93 crore. Lower provisions are good news if loans are healthier, but they are not a growing business.
• Across sectors. A bank at 20 and a hydropower company at 60 are not one cheap and one dear: they earn, borrow and are regulated differently.

Book value per share is shareholders' equity divided by shares; Nepali reports call it net worth per share. Everest's equity is Rs 35.01 arba; over 14,40,74,450 shares that is Rs 243.01, as printed. Equity is what would be left if the bank sold everything at its book value and paid everyone it owes.

It moves with dividends and bonus shares. At Asar end it was Rs 256.38. In this quarter Rs 137.21 crore of cash dividend left the bank, the 5% bonus spread the rest over more shares, and the quarter's profit added some back: Rs 243.01 by Ashwin end.

"Is a high or low book value per share better?" More equity per share is a thicker cushion, but book value is not a price to buy at. It is an accounting figure: loans after provisions, a hydropower plant at what it cost, and reserves the law locks in. What matters is the price against it, which is P/B.

P/B (price to book) is the price divided by book value per share: Rs 719 ÷ Rs 243.01 = 2.96. Buyers were paying Rs 2.96 for each rupee of Everest's equity. The commercial banks' median P/B in July 2026 was 1.4, so Everest was priced at about twice the typical bank against its book.

P/B and P/E are tied together by ROE: P/B = P/E × ROE. For Everest, 20.67 × 14.31% = 2.96. A bank that earns more on its equity can carry a higher P/B at the same P/E. So a high P/B is not dear by itself, and a low one is not cheap: ask what the bank earns on its book.

• Below 1 can be a bargain, or a sign the market doubts the book: hidden bad loans, a plant worth less than it cost.
• P/B suits banks and insurers, whose assets are mostly money, more than hydropower or manufacturing, where book value is what the assets cost.
• Some Nepali pages call a P/B up to 5 "safe". We found no basis for any such line; microfinance's median was 5.7 and investment companies' 9.4 in July 2026.

ROE (return on equity, इक्विटीमा प्रतिफल) is net profit divided by shareholders' equity: what the business earns on the owners' money. Everest's report prints 14.28%, annualised, on the average of the opening and closing equity; on the quarter-end equity it is 14.31%. ROA (return on assets, सम्पत्तिमा प्रतिफल) divides the same profit by everything the bank owns: 1.28% printed.

Borrowing links the two. Everest holds 11.48 rupees of assets for each rupee of equity, because most of its money is depositors'. 1.25% on assets × 11.48 = 14.31% on equity. Every bank works this way, and it is why bank shares are risky: the same multiplier works on losses. Compare ROE with a deposit's 3.77% after tax in Kartik 2083; the gap is what a shareholder earns for the risk.

From its 2082/83 profit Everest paid a 5% bonus and a 10% cash dividend in this quarter, as its statement of changes in equity shows. 10% is of the Rs 100 face value: Rs 10 a share, not 10% of the price. At Rs 695, the Asar-end price before the book closure, the dividend yield was Rs 10 ÷ Rs 695 = 1.44%. The 5% tax falls on cash and bonus together, Rs 0.75 a share, leaving Rs 9.25: 1.33%.

The payout ratio is the dividend divided by EPS. On the audited 2082/83 EPS of Rs 37.02, Everest paid out 27% in cash, 40.5% counting the bonus at face value, and kept the rest, as a bank near its capital floor must.

Market capitalisation is the price times the number of shares: the market's price for the whole company. Everest at Rs 719 × 14,40,74,450 shares = Rs 103.59 arba. At Asar end, Rs 695 on 13,72,13,760 shares came to Rs 95.36 arba, about 2.1% of NEPSE's whole value of Rs 46.01 kharba on 17 July 2026 (ShareSansar). The market as a whole was worth about 70% of Nepal's estimated GDP.

It measures size, not cheapness. Trading shows how easily a share changes hands: 21,17,188 Everest shares traded in 61 days, about 34,708 a day, between Rs 685.90 and Rs 760.20. A small company's price can be moved by a few orders.

Banks and insurers make up about half of NEPSE's value, and a bank's accounts look unlike any other company's. Everest owns Rs 402.05 arba. 63.6% of it is loans (कर्जा) and 14.2% investments (लगानी); the rest sits at Nepal Rastra Bank, in cash and at other banks. It is paid for mainly by deposits (निक्षेप), 83.7% of the total. Shareholders' equity is the thin slice at the bottom: 8.7%.

That slice is why loan quality matters so much to shareholders. If 1% of Everest's loans were never repaid, the loss would be Rs 2.56 arba: 7.3% of all its equity. NRB's ratios, next, keep the slice thick enough.

NPL (non-performing loans, निष्क्रिय कर्जा) is the share of loans more than three months overdue. Banks set profit aside against them: 1% of good loans, 25% of loans 3–6 months overdue, 50% at 6–12 months, 100% beyond a year. Everest's NPL was 0.5%, against a commercial-bank average of 5.57% that quarter, and its provisions covered its bad loans 2.95 times. Its notes say NRB's rules gave higher provisions than the international expected-loss model, so it booked NRB's.

CAR (capital adequacy ratio, पुँजीकोष) is capital divided by risk-weighted assets, in which a government bond counts for little and a business loan in full. NRB's Capital Adequacy Framework requires 8.5% plus a 2.5% buffer of core capital: 11%. Everest's was 11.78%, down from 12.77%: Rs 2.54 arba above the line, when the cash dividend it had just paid was Rs 1.37 arba. A bank near the line can expect less cash, a right share, or both.

The CD ratio (credit to deposit, कर्जा निक्षेप अनुपात) is loans against deposits as NRB defines them, at most 90%; Everest's 75.43% leaves room to lend. The spread (स्प्रेडदर), lending rate minus deposit rate, is capped at 4%; Everest's had narrowed to 2.96%, which squeezes what each loan earns.

A bank cannot pay out its profit as it likes. The Bank and Financial Institution Act makes it put at least 20% of each year's profit into a general reserve until that reserve is twice its paid-up capital, and requires Nepal Rastra Bank's approval for any dividend. NRB then moves profit that is not yet real cash into a regulatory reserve (नियामकीय सञ्चिति): interest booked but not received, provisions short of its rules, interest added to loans in a grace period. What remains, with profit kept from earlier years, is distributable profit (वितरणयोग्य नाफा), the only pot a dividend can come from.

Everest's page 7 works it through. Of its Rs 125.27 crore profit, 20% went to the general reserve and the funds together took Rs 44.48 crore. NRB's adjustments took Rs 8.64 crore, leaving Rs 72.15 crore from the quarter. With earlier years' retained profit, less the bonus and cash just paid: Rs 387.09 crore, Rs 26.87 a share. (The report also prints an "annualised" Rs 40.77, without saying how.)

Other banks had nothing to pay from. ShareSansar listed distributable profit per share that quarter of minus Rs 103.21 at NIC Asia Bank, minus Rs 43.39 at Himalayan Bank, minus Rs 28.83 at Prabhu Bank, minus Rs 15.12 at Nepal Investment Mega Bank. Whatever the profit, this line decides the dividend. As reported, NRB's 2082 procedure also ties cash dividends to capital adequacy and has its supervisors review the accounts before the board signs.

The same ratios apply to every sector, but what they mean changes with how each business earns its money and who regulates it.

• Hydropower. Profit follows the river. A typical run-of-river plant has sold to the Nepal Electricity Authority at about Rs 8.40 a unit in the dry season (December to May) and Rs 4.80 in the wet, when it generates most; the first quarter is monsoon. Most plants are built on bank loans, so interest comes before shareholders. Check whether the plant is running, its power purchase agreement and its debt. With 24 of 110 companies loss-making in July 2026, P/E often means nothing, and book value is mostly what the plant cost.
• Insurance. A life insurer's profit rests on an actuarial estimate of what it will owe; a non-life insurer's on claims against premiums. The Insurance Authority requires a solvency ratio of at least 1.5 and approves dividends. Median P/Es of 57.1 (life) and 107.6 (non-life) in July 2026 priced in a lot of growth.
• Microfinance. Many small loans, so NPL is the main risk, and NRB ties dividends to it: no cash dividend below a CAR of 9%, none at all with NPL above 15%, and with NPL below 5% the caps in the table. The median P/B was 5.7.
• Development banks and finance companies read like commercial banks, but spread far wider: Narayani Development Bank reported an NPL of 49.01% in the first quarter of 2083/84.

"How do you use EPS to work out a share price?" Multiply it by a P/E you think fair. At the commercial banks' median of 18.7, Everest's Rs 34.78 gives Rs 650.38; at Graham's 15, Rs 521.70. The same idea with book value: the median P/B of 1.4 × Rs 243.01 = Rs 340.21.

The Graham number joins the two: √(22.5 × EPS × book value per share), where 22.5 is Graham's ceilings of a P/E of 15 and a P/B of 1.5 multiplied. For Everest, √(22.5 × 34.78 × 243.01) = Rs 436.08; its price was 65% above. Graham never wrote this formula himself; others built it from his limits. A share passes when its P/E times its P/B is 22.5 or less: the median bank in July 2026 did not (18.7 × 1.4 = 26.2), and Everest was far from it (20.67 × 2.96 = 61.2).

The four answers run from Rs 340.21 to Rs 650.38, against a market price of Rs 719. That spread is the honest result: each method is an assumption about the future. Treat any one as a range, not a price tag. The pillar guide, how to invest in Nepal, adds the PEG ratio, the dividend discount model and the margin of safety.

Fundamental analysis (people often search it in Nepali, फन्डामेन्टल एनालाइसिस) is mostly this: reading the report and asking what each number means. Take any bank's report, or Everest's from its financial reports page, and go through it in this order:

1. 1The cover: which quarter, "unaudited", and the unit (Everest counts in thousands of rupees).
2. 2The balance sheet: assets, deposits, loans and equity against the last year-end. Loans growing faster than deposits push the CD ratio up.
3. 3Profit or loss: the profit, then where it came from: net interest income is the core; trading gains and released provisions come and go.
4. 4The EPS line: annualised or not, on how many shares. Divide profit by paid-up capital ÷ 100 yourself.
5. 5Changes in equity: bonus and cash paid, and what went into the regulatory reserve.
6. 6Ratios as per NRB directive, and the notes under them: CAR, core capital, NPL, cover, CD ratio, spread, each against last year.
7. 7Distributable profit: the last line, divided by shares.
8. 8Highlights, trading record, management's analysis, legal cases: the printed price, P/E and net worth per share, the quarter's high, low and volume, and what the board says is hard.

• Annualising the first quarter: Everest's, times four, was 7.1% below its year. Use trailing twelve months.
• Forgetting bonus shares: Everest's EPS "fell" 4.6% as its profit rose 6.2%.
• One-off profit taken for growth: released provisions or a trading gain lift EPS once.
• Unaudited figures trusted to the rupee: Everest's year moved Rs 0.95 crore in the audit.
• Averages mixed with medians: the banks' average Q1 P/E of 36.84 and July's median of 18.7 describe one sector.
• A P/E on tiny or negative profit, or compared across sectors: it says nothing.
• An old price: recompute the report's P/E at today's price.
• High EPS taken for cheap: an EPS of Rs 50 on a Rs 2,500 share is a P/E of 50.
• Book value or profit taken for cash: reserves are locked, and a bank pays only from distributable profit.

1. 1Get the latest quarterly report and the last audited annual report from the company's website.
2. 2Work out EPS yourself: profit ÷ (paid-up capital ÷ 100). Note whether it was annualised; add up the last four quarters for trailing twelve months.
3. 3Adjust earlier EPS for every bonus share since, and see whether profit per share really grew.
4. 4Find where the profit came from: the core business, or released provisions, trading gains, a one-off sale.
5. 5Work out P/E at today's price, and its earnings yield beside a deposit's after-tax rate.
6. 6Compare P/E with the sector's median and the company's own past, never with other sectors.
7. 7Work out book value per share and P/B, and check P/B against P/E × ROE.
8. 8Compare ROE with the deposit rate after tax, and ask how much comes from borrowing.
9. 9For a bank: NPL and cover, CAR against 11% and core capital against 7%, CD ratio against 90%, the spread, and which way each moves.
10. 10Read distributable profit per share and the regulatory reserve before expecting a dividend.
11. 11For other sectors add their own checks (the plant and its debt; solvency; NRB's microfinance limits), and work out the cash dividend yield after tax.
12. 12Look for what changes the share count or price: a right or bonus issue, a book closure, a promoter lock-in ending.
13. 13Write down a range and your reasons, not one value. If you cannot finish these steps, a mutual fund does this work for its fee.