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What is the payback ratio?

We explore why investors should consider calculating payback ratios along with P/E

What is the payback ratio?

The flood of IPOs of new-age companies has sparked countless debates on valuations in recent years. And more often than not, these debates are centred around P/E. Take the example of Nykaa. When the new age cosmetic seller debuted on D-street, many veterans pinched their noses when they saw a P/E of 1,600 times.

This article was originally published on March 21, 2023.


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