Hi Dileep,
Book value is a good way to estimate if the company is trading above or below its per share asset value. For example if you own a piece of land worth 1 Crore and gold worth 50 lakh, the minimum network should be 1.5 Crs. If you have 2 depends to whom you intend to pass on this net worth, then the depended's minimum book value is 1.5Crs divided by 2 = 75laks.
Likewise when it comes to companies the book value tells us what is the minimum net worth of the company on a per share basis. Here is how you calculate it...
I've taken the stock price from NSE. As you can see, the book value is 102 but the stock is trading way below its book value, thus making it an attractive investment proposition.
Also, it is worth mentioning that just because the stock is below book value it should not be considered a buy. You need to ensure all other fundamentals are in place before you goahead and invest.