As some new learners requested, I am making below steps for
making understandable on how to make “Basic
Fundamental ratios Sheet?” Like below
I dedicate this post to Mr. Mahesk Kaushik, the share
genius, who is the starting point of my fundamental knowledge and inspiration
to select good companies and value investing methods. You can see his beautiful
blog, if not yet seen. But I think if you are reading this, you may already
seen it. LLink given below
Disclaimer: This
is the process which I follow personally, This may be good or worse, you can
decide as per your analysis and also this is not the ultimate tool for
identifying thee valuable stocks, this is one of the sheet which makes you
closer for the same.
Each step Explains each row , about data segregation,
formulas, guidance etc etc
Before going to steps let’s see the sheet once.
Promoters are the majority shareholder group that manages the day-to-day affairs of a company. When they need money, very often, promoters of listed companies pledge all or some of their shares with lenders. It means that these shares are offered as collateral to banks in exchange for loans.
So Zero pledged shares are always preferable
Go to moneycontrol.com, Enter share name and on from left column select share holding,
On the left column you can see the Pledged shares count and at bottom
percentage
This was the latest comparison sheet for Sector - Chemicals and Industry: Packaging Films, let’s assume
sr. no 1-17 are as steps
Step: 1 Promoters
holding:
We all know the promoters holding meaning, I sue www.bseindia.com for the same, the reason is
accuracy and you can see last 4 quarters instantly.
Just visit the website, type stock name, come to the right
corner below and click on SHP, you
will see like below window.
Above 50, I feel safe and 50I means increase of promoters holding
from last quarter and 50D means decrease from last quarter, refer below image
Step 2: Pledged Shares
So Zero pledged shares are always preferable
Go to moneycontrol.com, Enter share name and on from left column select share holding,

In our case its ZERO,
a good sign
Step 3: Dividends /
yield:
From moneycontrol.com, after selecting the share, below
chart you can get dividends and Yield
You can also view Dividend payout history by selecting the corporate action
Step 4: Net sale per
Share: NSS:
As the
name indicates, it is the value for net sale per share in rupees. The value
should be greater than CMP, I use 75% to the CMP as my selection criteria as
NSS of greater value is rare.
Formula for Net sale per share = Total Sales or revenue /
Total no. of shares held.
Total Revenue you can get from Step 1 results tab &
Total Shares you can get from Step 2 end of the page.
Step: 5 200 DMA
200 DMA means 200 Day Moving average, always CMP trading
near or above 200 DMA is positive.
You can get the same in moneycontrol.com,
Enter share name and select “Historic Prices &
Simple Moving Averages” as shown below
Step 6: 3 Yr. WMA
For the same go to ChartInk.com and select scrip, go to chart and in chart select MA and select Weighted and put value 780 (approx 3 years), then select period 3 Years and update chart, then you can see the 3 Yr. WMA as shown in below picture.
Step: 7 Profit /
Loss:
Its a Financial performance of the company compared with the previous
years, whether the company in Profits or Loss or Nuetral. You can see it from Screener. In Annual Reports section.
Step 8: Market Cap
Market
capitalization is one of the best measures of a company's size. Also known as
market cap, market capitalization is the total market value of a company's
outstanding shares of stock. To calculate
market capitalization, simply take the total number of a company's shares
outstanding and multiply that figure by the stock's market price (CMP)
For total no. of shares, refer step 4
Step 9: Revenue:
You can get the total revenue by as like in Step 4 or
“Moneycontrol.com>Financials>Profit and loss”
Always
remember that Total revenue should be mostly from operations / sales, keeping
other income as low as possible
Step 10: Net Profit:
Same
as like step 9, you can get Net profit from either BSEindia.com or www.
Moneycontrol.com
Net
profit should always trending up or at least higher than previous year
Step 11: Net Profit margin %:
Net profit margin is the percentage of revenue remaining after all operating expenses,
interest, taxes and preferred stock dividends (but not common stock dividends) have
been deducted from a company's total revenue.
Net Profit Margin % = Net profit / Revenue * 100
Net Profit and net revenue, you can get from step 8 and 9
Up
to now we seen the general terms and values of shares, from below we see the
real ratios we cann as “Fundamental
ratios” of the company
Step 12: ROE “Return on Equity”
My
preference for ROE is above 15 and above peers
Return
on equity (ROE) is the amount of net income returned as a percentage of
shareholders equity. Return on equity measures a corporation's profitability by
revealing how much profit a company generates with the money shareholders have
invested.ROE is expressed as a percentage and calculated as:
Return on Equity = Net Income/Shareholder's Equity*100
Net
Income or Net profit we can get from Step 10 and for share holders fund you can
get from Moneycontrol.com<Financials, pls refer below image
Step 13: P/B Ratio:
P/B
ratio means price to book ratio where price = CMP and book means book value.
P/B
ratio = CMP / Book Value. (Less than 1 is always preferred and to max up to
2.5)
You
can directly get is from Moneycontrol.com, from step 3, refer below image
Step 14: Price/Earning, P/E ratio:
The
price-earnings ratio (P/E ratio) is the ratio for valuing a company that
measures its current share price relative to its per-share earnings. The
price-earnings ratio is also sometimes known as the price multiple or the
earnings multiple.
P/E ratio
= CMP / EPS (EPS means Earning per share)
I
prefer P/E should be less than Industrial P/E and less than peers or below 15
Earnings per share we can get from Step: 10, pls refer below image (Pls
note EPS for last year also)
Step: 15, Debt/ Equity ratio:
The debt-to-equity ratio is a measure of the
relationship between the capital contributed by creditors and the capital
contributed by shareholders. It also shows the extent to which shareholders' equity
can fulfill a company's obligations to creditors in the event of liquidation.
D/E
ratio = Assets / Liabilities or Share holders fund / Total Liabilities
Refer
step:12 for going to balance sheet and for share holders fund and for
liabilities from the same sheet ADD “Total Non-Current Liabilities” and “Total
Current Liabilities”
So, D/E
ratio = Total Share holders Funds / (Total Non-Current Liabilities + Total
Current Liabilities)
I
prefer 0.5 and below as safe level
and Maximum to 1. Refer below image
Step: 16, Earnings Yeild %:
Earnings yield are the earnings
per share EPS for the most recent 12-month period divided by the current market
price per share. The earnings yield
(which is the inverse of the P/E ratio) shows the percentage of each rupee
invested in the stock that was earned by the company.
Earnings
Yield % = EPS / CMP *100 (CMP = Current market price)
*EPS
you can get from step 14
Earning’s
Yield should be greater compared to last QoQ or YoY
Step: 17, P/E Growth, PEG Ratio:
For this reason, the price-to-earnings-growth ratio, or PEG ratio, takes the P/E ratio and combines it with the company's expected earnings growth, in order to better express the valuation of growing companies. The PEG ratio is easy enough to calculate -- simply divide the P/E ratio by the company's expected earnings growth rate.
PEG Ratio = P/E ratio /
Earnings growth rate
P/E ratio you can get from step: 14 and for growth rate = ((this year
EPS/Last Year EPS)-1)*100, get EPS from Step:
14
In general, a PEG ratio of
less than 1 is considered to be indicative of an undervalued stock and a
PEG ratio of more than 1 could imply that a stock is too expensive.
Conclusion:
This way we can identify the basic fundamentals of a company,
financial ratios, growth rates and Valuation of stock at CMP but before taking
final decision, below things are needed to be assured
1.
Comparison of values with
PEERS
2.
Companies performance QoQ
and YoY
3.
Future growth aspects of
a company (From annual reports and news)
Thank you, Comments are
welcomed
Good
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