EV to EBITDA
Enterprise Value to EBITDA
EV to EBITDA compares the total cost of acquiring a business, debt included, with its operating earnings before interest, tax, depreciation, and amortisation.
Formula
EV/EBITDA
EV/EBITDA = Enterprise Value ÷ EBITDA
EBITDA
EBITDA = Operating Profit + Depreciation + Amortisation
Benchmark: Compare within the sector; capital-light businesses command higher multiples
Reading the number
PE compares the price of the equity with profit after interest and tax. EV/EBITDA compares the price of the whole business, debt and all, with profit before financing and accounting charges. That makes it the fairer multiple when comparing a debt-heavy company with a debt-free one, or companies with very different depreciation policies, or companies in different tax situations.
It is the standard multiple for acquisitions, for capital-intensive sectors such as cement, steel, telecom, and power, and for comparing companies across countries. A lower multiple is cheaper, but only against peers with similar growth and capital needs.
Indian example
Related ratios
Glossary terms
From the research
A Comparative Financial Analysis of Three Listed Companies
Three IT services leaders, five years of numbers: similar growth, very different margins and returns on capital, and their October 2026 valuations.
MarketsIPO Issue Price vs. Listing Price vs. Subsequent Performance
Seven of India's most talked-about IPOs since 2021, tracked from issue price to listing to October 2026. Buying on listing day lost money in six of seven.
ValuationPaytm: Valuing a Company With No Clean Comparable
Paytm is part payments processor, part device business, part loan distributor. Why no single peer fits, and how to value it in parts and in reverse.