Basic Concepts of Stock Analysis
How to know if Promoters are Losing Commitment to the Company
Whenever a fundamental investor buys shares of a company, then she buys it with an expectation that the promoters/managers of the company will grow the business significantly in the future. She places her trust in the promoters of the company that they will value her
How to identify Promoters extracting Money via High Salaries
Promoters, many times, work full-time in their companies like any other employee of the company. It is only natural to think that when they dedicate their entire time to the business, then they would also expect to be rewarded for their hard work like any
How Promoters use Loopholes to Inflate their Shareholding
The level of promoters’ shareholding in a company is a very important parameter in stock analysis. This is especially important in markets like India where most of the businesses are family-owned. This is because many times, the shareholding level acts as an indicator of the
How Companies Manipulate Cash Flow from Operating Activities (CFO)
Earnings are an estimate and cash is real! This is a principle that has stood the test of time in the investing world. Many companies that reported profits on paper (P&L) without backing it up with cash (CFO) have faced bankruptcies; destroying the wealth of
Relevance of Credit Rating Agencies and the Responsibility of Regulators in Current Environment
The current article in this series provides a response to an important query about credit ratings: Relevance of Credit Rating Agencies and the Responsibility of Regulators in the Current Environment Dear Sir, I am writing to you to understand the current state of affairs in
How to do Business Analysis of IT Services Companies
Recently, we analysed an information technology services company for providing our inputs to the analysis submitted by a reader. While analysing this IT Company, we attempted to understand this sector, along with the key parameters, which can act as an actionable framework for making investing
Interest Rate Risk for Financial Institutions: A Simple Guide
Interest rate risk (IRR) for a financial institution is similar to changing raw material costs for a manufacturing organization. If a financial institution like bank, non-banking finance company (NBFC) or housing finance company (HFC) is not able to manage interest rate risk properly, then it
Asset Liability Mismatch: Why do NBFCs & Banks knowingly create it?
The current article provides responses related to the query: Why do finance companies use short term funds like commercial papers (CPs) and current/savings account (CASA) for giving long term loans and create an asset liability mismatch? We have a section dedicated to answering queries from
When a company should sell all assets and invest money in FDs?
The current article in this series provides responses related to the following queries: When a company is better off by selling all its assets and invest the money in Bank’s fixed deposits? Applicability of (net PAT/total assets vs FD) to banking/financial institutions/service sector companies Use
Standalone vs Consolidated Financials: A Complete Guide
Many times, investors are uncertain about using standalone vs consolidated financials in their stock analysis. Over time, we have received a lot of queries from investors in the Ask Your Queries section asking us whether they should use standalone vs consolidated financials in situations like
- Buy/sell recommendations for selected stocks with a crisp investment rationale
- We have selected these stocks after an in-depth financial, business, valuation, and management analysis
“Peaceful Investing” is the result of my experience of more than 15 years in stock markets. It aims to find such stocks, where after investing, an investor may sleep peacefully. If later on, the stock prices increase, then the investor is happy as she is now wealthier. If the stock prices decline, even then the investor is happy as she can now buy more quantity of the selected fundamentally good stocks.
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