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Smart Money

Glossary

What is EV/EBITDA?

EV/EBITDA divides enterprise value by EBITDA, a valuation multiple that is neutral to how a company is financed.

Because both parts include the claims of lenders, EV/EBITDA compares companies with very different debt levels more fairly than P/E. It is used for industrial companies, not banks or insurers.

Formula

EV/EBITDA = enterprise value ÷ EBITDA

EV/EBITDA on the Pakistan Stock Exchange

Across 270 listed companies with the figure, the median is 6.0×.

EV/EBITDA of the largest PSX companies
Largest companiesEV/EBITDA
OGDC Oil & Gas Development Company Limited 4.3×
FFC Fauji Fertilizer Company Limited 5.9×
MARI Mari Energies Limited 7.0×
PPL Pakistan Petroleum Limited 3.0×
LUCK Lucky Cement Limited 4.7×