Basic funda analysis how to identify red flags by common sense
מעודכן
Hi guys,
Please read comnpletely ,in bull markets many stocks will come out as wealth destroyers, how this article will provide some fruitful knowledge and may help some retailers to saver their capital as nowdays some stocks are at crazy valuations
so basic thing for any stock is profits , i.e eps(earning per share)
so for example lets consider idea stock it has a market cap of 41377cr (reference from money control)
i still dont know how it trades at market cap of 41000 cr when it has quaterly results of minus 6148cr in mar 2023 last year minus 28245 cr (can refer from trendlyne .com) you can also find other year results which are also in -ve from 2017 to 2023 so it losses are like 150,000 cr from 2k17 to 2k23 even if you check in balance sheet in trendlyne total shareholders funds are itself around -73000cr ,so basically the company is like over in my point of view ,also you can see book value itself is -3.53 ,, i still hear some news from some guys that idea will go to 30 rupees or 40 rupees but if you consider this you will understand how big the bubble is,
i think there are many big guys stuck in the stock and they want exit may be ,i heard story of a guy who invested around 2cr in idea he still believes it will go to 50 , the point is the stock may rally ,because when someone want to dump the stock they need to increase stock value , that is why some stocks with bad fundamentals sometimes rally like anything ,
so why this happens, this happens because they need to attract retailers the bees with the fragnance of greed ,so some or the other retailer enters it with huge capital and they are done from next day many weak fundamental stocks start to hit ciruits and they will be trapped .
so guys fist basic avoid a stock with negative eps or losses-do not go and buy a loss making company even if there might be a positive news story floating around the social media
second check book value with respective to historical p/e
one of my fav is peg ratio ,, price to earnings growth ratio. if this is between 0-2 the companies are very good and growing constantly usually peg 0-1 are best , but 0-2 are also ok as it is compared with growth as ratio.
if you can compare various companies with respect to eps , and p/e along with sector p/e with some stocks you get a good idea of valuations ,
-------------------------->share value = eps*p/e
now take some companies on your own and see how they are valued how much eps is coming qoq and yoy , how much historically it trading with p/e
you can do so work comparison on the following stocks
tatacoffee
itc
iifl
bajaj finance etc any stock you wish further
for reference usually i prefer money control and for financials trendlyne is comfortable to me
so it is just to see if a company is in profit most basic thing , dont go blindly by brand name atleast look at basic numbers.
disclaimer- this is not any investment call or idea , this just my view and it can go wrong ,this is only for educational purposes trade at your own risk :) this info is for educational purposes and how i analyse stocks and how i think.
Please read comnpletely ,in bull markets many stocks will come out as wealth destroyers, how this article will provide some fruitful knowledge and may help some retailers to saver their capital as nowdays some stocks are at crazy valuations
so basic thing for any stock is profits , i.e eps(earning per share)
so for example lets consider idea stock it has a market cap of 41377cr (reference from money control)
i still dont know how it trades at market cap of 41000 cr when it has quaterly results of minus 6148cr in mar 2023 last year minus 28245 cr (can refer from trendlyne .com) you can also find other year results which are also in -ve from 2017 to 2023 so it losses are like 150,000 cr from 2k17 to 2k23 even if you check in balance sheet in trendlyne total shareholders funds are itself around -73000cr ,so basically the company is like over in my point of view ,also you can see book value itself is -3.53 ,, i still hear some news from some guys that idea will go to 30 rupees or 40 rupees but if you consider this you will understand how big the bubble is,
i think there are many big guys stuck in the stock and they want exit may be ,i heard story of a guy who invested around 2cr in idea he still believes it will go to 50 , the point is the stock may rally ,because when someone want to dump the stock they need to increase stock value , that is why some stocks with bad fundamentals sometimes rally like anything ,
so why this happens, this happens because they need to attract retailers the bees with the fragnance of greed ,so some or the other retailer enters it with huge capital and they are done from next day many weak fundamental stocks start to hit ciruits and they will be trapped .
so guys fist basic avoid a stock with negative eps or losses-do not go and buy a loss making company even if there might be a positive news story floating around the social media
second check book value with respective to historical p/e
one of my fav is peg ratio ,, price to earnings growth ratio. if this is between 0-2 the companies are very good and growing constantly usually peg 0-1 are best , but 0-2 are also ok as it is compared with growth as ratio.
if you can compare various companies with respect to eps , and p/e along with sector p/e with some stocks you get a good idea of valuations ,
-------------------------->share value = eps*p/e
now take some companies on your own and see how they are valued how much eps is coming qoq and yoy , how much historically it trading with p/e
you can do so work comparison on the following stocks
tatacoffee
itc
iifl
bajaj finance etc any stock you wish further
for reference usually i prefer money control and for financials trendlyne is comfortable to me
so it is just to see if a company is in profit most basic thing , dont go blindly by brand name atleast look at basic numbers.
disclaimer- this is not any investment call or idea , this just my view and it can go wrong ,this is only for educational purposes trade at your own risk :) this info is for educational purposes and how i analyse stocks and how i think.
הערה
Also one can see sales growth yoy,for case study you can see
united spirits and radico kaithan
yoy radico kaithan sales kept on increasing and for united spirits for past 10 years sales remained same that is why radico rallied from 300-400 to 1200
הערה
and P/e ratio is nohing but good will guys,case study can consider cdsl
which at one point reached around 67 p/e which is very high
actually p/e above 40 is considered to be high unless it is a monopoly or duopoly or industry leader ,
but p/e also depends on sector
simple example why on sector
for example land in mumbai costs very high where a land in small village cost less, like wise it depends on company sector if it metals industry p/e is low for example you can see sector p/e for tatasteel
sarda energy and minerals etc.
based sector p/e also one must consider p/e
הערה
bsnl is under government and has market share around 3% , now idea is also losing customers and if it goes under government its over , just some scuttle butt ask your relatives and friends any 10-20 people randomly what sim card they are using you get to know the facts
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