Unlock Investment Opportunities: Learn How P/E, P/B, EV/EBITDA, and PEG Ratios Can Help You Compare and Choose the Right Stocks

Understanding Market Bubbles: How to Spot Over-Optimism and Make Smarter Investment Choices

A historical income statement is an indispensable tool in financial analysis, offering insights into a company’s past performance.

These terms help investors, analysts, and company leaders understand a business's profitability and overall financial performance.

Both offer distinct advantages and can be an important part of an investor’s strategy, depending on their financial goals.

Many successful investors combine both approaches, allowing them to make well-informed decisions that consider both the financial health of a company and the behaviour of its stock price.

Understanding the Interaction Between Total, Variable, Fixed, and Marginal Cost and Output

Key Differences Between GAAP and IFRS

Understand the connection between retention and progress.

It gives a score from 0 to 9 based on nine simple checks from a company’s financial reports.

To make informed investment decisions in the life insurance sector, it's essential to consider various key financial parameters.

Red flags help investors quickly spot potential problems so they can decide whether to investigate further or avoid investing altogether.

Now let us understand Cash Flow with the help of a blue-chip company or large-cap company: Larsen & Toubro Ltd

A low price-to-book ratio (P/B ratio) may indicate that the stock is undervalued, while a high P/B ratio may suggest overvaluation.

Both strategies have their own benefits which depend on personal risk and investment horizon. In this article, we will explore them further.

These ratios help in valuing a stock, financial health of the company, profitability and efficiency.

Diversification is the art of spreading your investments across various asset classes, and industries to reduce risk and enhance the potential for consistent returns. 

Constructing a diversified investment portfolio is a foundational aspect of financial success. In this article, we will further explore it.

In the article, we will explore how these ratios can help investors value stocks, and assess a company's financial health, profitability, and efficiency.

The S&P BSE SmallCap index has gained more than 25 per cent in the last one year.

Learn the secrets of finding stocks that can deliver 10x or more returns in the long term. 

If you have the patience to let time work its wonders for two full decades, brace yourself, for you'll be cradling the coveted 100-bagger. And for those willing to embark on a 30-year odyssey, an awe-inspiring 1000x treasure awaits at the end of the rainbow

Identifying a stock before it undergoes re-rating is undoubtedly challenging. High P/E multiples, around 60-70x, tend to diminish the likelihood of re-rating significantly when compared to stocks with lower multiples.

Learn how to identify undervalued stocks with long-term growth potential, avoid value traps, and manage your risk.

Discover essential knowledge on investing with stocks for beginners or those looking to expand their money.

The Phenomenon of Conglomerates – A Case Study of ITC

ITC Limited has nearly doubled since February 2022 and now it is trading at its all-time high of Rs.443 (8^th June 2023). Most brokerage houses have been issuing research reports that recommend it as a Buy or Add. Now, as a thinking retail investor, how do you look at it? How do you decide if you will buy it now if you missed putting it in your portfolio or will you hold it if you are already sitting on some nice long term capital appreciation?

One important lesson Karan learned was the significance of evaluating a stock's market value in relation to its intrinsic worth. Just as a precious gem's value can be determined by its clarity and cut, a stock's true value lies beneath its market price.

When you buy a Rs.25,000 mobile or a refrigerator, you would spend quite some time researching for the machine with the best package of features, reliability, prestige value, and cost. That would often take hours on the internet and a couple of visits to the store; so why not spend less than an hour on the stock you have been tipped to buy?

Commodity cyclicals can be one of the most challenging sectors to analyze, comprehend and profit from due to the market participants' inability to accurately predict the movement of underlying commodity prices, which influences the fluctuation in the prices of these stocks.

Momentum strategy aims at buying high and selling even higher.

Discounted cash flow, which is popularly known as DCF valuation, denotes the intrinsic value of a security as the present value of its expected future cash flows. When applied to dividends, the DCF model is the discounted dividend approach or dividend discount model (DDM).  

The valuation of a company is a critical aspect for analysts and investors studying a potential company for investment purposes. The most commonly used, valuation metric is the price-to-earnings ratio which is, defined as the ratio for the valuation of the company, which measures its current share price relative to its earnings per share (EPS).  

Enterprise value-to-sales (EV/sales) is a financial ratio measuring the company’s total value (in enterprise value terms) to its total sales revenue. To simplify more, it is EV per dollar of sales. This means that the higher the ratio, the more ‘expensive’ or valuable the company is, and vice versa. The ratio is used for financial analysis and valuation strategies while doing research for a potential investment. 

Investors prefer derivatives as they facilitate price discovery, strengthen the underlying asset's liquidity, and work effectively as a hedging tool. 

Return on Invested Capital (ROIC) and ROCE (Return on Capital Employed) are financial ratios to understand how efficiently a company invests its capital. 

A ‘derivative’ is a financial contract or a security with a price. Derivative contracts come in many different forms, such as forwards, futures, options, and swaps.  

In this educative article, we shall introduce you to the basic banking terms that are a ‘must-know’ in analysing financial reports.

EIC Framework is a top-down approach tool, and as the name implies, the researcher focusses on the economy, industry, and finally, the company. 

The most common definition of recession requires the GDP of a country to contract in two successive quarters. 

When holding a dividend-paying stock, it's important to keep in mind, the following things!

PEG ratio is a company’s price/earnings ratio divided by its earnings growth rate over a period of time. The PEG ratio adjusts the traditional P/E ratio by taking into account the growth rate in the earnings per share that are expected in the future and it is considered to provide a more complete picture than the more standard P/E ratio.  

Valuation metrics are ratios and models that can give investors an idea of what a company may be worth.

Decoding current correction from historical drawdown.

Let's understand the concept of Stagflation.

There are thousands of listed companies in India. It is not possible for any investor to track every single stock. Amidst such a scenario comes the importance of ‘index’ in the picture.   

All the major equity indices have declined, however, there are few themes that have performed better than others since the start of the year. ‘Value’ theme is one of them.

Shareholder's equity is residual claim on the company's assets belonging to the company's owners once all liabilities have been paid.

IT companies on average had generated returns in excess of 300 per cent between April 2020 and December 2021.

Let's understand the concept of Cash Flow and Fund Flow.

Goodwill is defined as the value of the reputation of a firm built over time, taking into consideration the expected future profits over and above the normal profits. Goodwill is an intangible real asset, which cannot be seen or touched but has an existence in reality and can also be purchased & sold. Goodwill valuation plays an important role in a partnership.  

Investing in a mutual fund is a process that requires some basic knowledge as well as market awareness. An investor either invests with the help of an intermediary or may conduct research in order to invest on his own. That is where the importance of ‘evaluation of mutual fund’ comes into the picture! 

In India, more than 90 per cent of the trading is done in the derivatives segment. However, the fun fact is that most of the traders lack knowledge about it.  

Before starting, let’s take a quick glance at some figures! In India, between March 2021 and December 2021, the total assets under management (AUM) of ETFs rose nearly 40 per cent in India to Rs 4,02,601 crore. The market reports inform that with 122 ETFs in December 2021, there has been a rise of more than 18 per cent in the total number of ETFs during this period. 

Volatility measures the frequency and magnitude of price movements that a financial instrument experiences over a certain period of time. VIX is a real-time volatility index which reflects the volatility expectation of the market participants over the next 30 calendar days. 

Benjamin Graham, the father of value investing and mentor of legendary investor Warren Buffett, pioneered the concept of margin of safety. In his book, ‘The Intelligent Investor’, first published in 1949, Graham wrote, “The margin of safety is always dependent on the price paid. It will be large at one price, small at some price, non-existent at some still higher price. 

A spin-off is an operational corporate strategy wherein the parent company separates a particular division into a new independent publicly traded entity or subsidiary.

Shelf registration is a type of public offering which permits certain issuers to file or register for a bond offering in advance. It is also known as shelf offering or shelf prospectus.  

The financial consultants or the portfolio managers determine the overall risk tolerance and objectives to determine an appropriate asset allocation. After the allocation is determined, the portfolio managers distribute the capital both strategically and tactically to invest with a focus on what is best for each client.  

Every successful business recognises that its biggest threat will come from competitors and that keeping them away is crucial to maintaining its supremacy. As competitors nibble away at their market share, companies are likely to witness a decline in their bottom line over time. That is why a company that wants to be dominant must create an economic moat. 

Return on Equity is one ratio that is favoured by investors and also bears much importance. At times, companies tend to amplify the ratio. Have a look at how can this happen!

The main goal of every investor is to create wealth in the long term. 

P/E is a suitable measure for valuing the equity of the company as it includes the residual profit (EPS) as the denominator. EV/EBITDA is an apt measure of valuation when one is looking at mergers and acquisitions.  

A bulk deal is a transaction in which more than 0.5 per cent of the shares of the listed company are bought or sold.

Along with various approaches used for the valuation of equity, there is a significant degree of uncertainty involved regardless of the valuation approach used. The future is inherently uncertain and valuing businesses requires making assumptions about the future. Taking into consideration this uncertainty, an effective analysis must consider scenarios in addition to the most likely “base case” result.

Block deals enable institutional investors to execute large trades without the markets knowing about it.

The much-awaited Union Budget took everyone by surprise as several new initiatives were launched by the Finance Minister.

Companies require funds for various purposes such as purchasing a new plant, machinery, or for expansion and diversification. 

This type of trading is also known as automated trading, black-box trading, or algo-trading.

Evaluation of portfolio performance is a crucial step in the process of wealth creation in the long term. 

At present, the stock exchange in India follows a ‘T+2’ rolling settlement cycle. The day the trade is executed is known as the ‘Trade Date’ and is signified as ‘T’. Every working day after the trade date is signified as T+1, T+2 and so on with weekends and stock exchange holidays not included. At present, the trades in India settle on T+2 days. 

 Popularly known as ESG investing, this trend has led to an increasing number of companies making disclosures about their business practices. 

Tata Consultancy Services, India’s largest IT service provider, and rivals Infosys and Wipro kicked off the third-quarter earnings season by declaring their results on January 12, 2022. While, overall profits and sales are important for such software companies, as an investor, it is important to go beyond these while picking and analyzing stocks. The IT industry has several business metrics that show the progress of a company’s business goals.

With this scorecard, companies can gauge their governance practices and help them in their endeavour to follow the best global practices. 

Popularized by legendary Fidelity manager Peter Lynch, Growth at a Reasonable Price (GARP) is a well-known, much-practised investment approach.

Dividends can either be in the form of stocks or cash. 

Very often, we come across articles such as, “Sensex, Nifty trade at day’s high” or “Indices end in green, led by IT”. But what do they mean?  

For the uninitiated, options are derivative contracts whose value is derived from an underlying asset. And option premium is the price at which these contracts are bought or sold. 

The Fed will speed up a reduction in bond purchases to US$30 billion a month so that the programme could end in March instead of the original plan of June”. This reduction in a bond purchase is called tapering.

Depositary receipts create a provision for shares of a public company to be traded on an exchange outside its domestic market.  

Evaluating stocks requires specific knowledge about the company’s sector and industry. You need to know all the forces that impact companies in the same category. For example, factors that drive the profits in a shipping company are very different from those affecting a bank’s bottom line. 

Companies require funds for various reasons ranging from fulfilling working capital requirements, purchasing property, plant and equipment to financing growth and expansion aspirations. When companies raise capital by issuing equity, the cost they incur is called the cost of equity.

A derivative is a contract whose value is derived from an underlying asset.

REITs or Real Estate Investment Trusts are a new asset class that has come into the Indian market which gives investors a chance to get exposure to real estate without incurring the huge cash outflow typically needed for physical properties (commercial or residential). 

Related party transactions, which are guided by the Indian Accounting Standard 24 or IND 24, requires companies to make disclosures of related party relationships, transactions and outstanding balances with their related entities in their financial statements.

The Bombay Stock Exchange classifies all the listed stocks under different groups such as ‘Group A’, ‘Group T’, etc. This classification is done after assessing various qualitative and quantitative parameters. 

Piotroski score is a metric score that helps to determine the financial strength of a company.

Alpha and Beta are two of the widely used measures of risk that investors use for assessing investment options. But what do they mean exactly? Let’s find out! 

The ASM framework came into force with effect from March 26, 2018. 

Stagflation is the situation marked by low economic growth and high unemployment rates accompanied by rising inflation, ie, a rise in the prices of goods and services. 

The main objective of LBO is to be able to acquire without dedicating a large amount of money.

Every strategy has the potential for yielding desired returns provided the strategy is well researched, properly executed, disciplined and monitored and reviewed and with due consideration of macroeconomic factors. 

IPOs and FPOs are two such paths that are undertaken by companies who want to raise funds from the general public.  

There is a small link between cricket and the stock market.

These days watching T20 is fun, thrilling, and exciting, likewise trading in the stock market is also very interesting, and quick money can be made out of it.

Online trading is the act of buying and selling financial products through an online trading platform.

Long-term period is more than 10 years for equities? Read here to know more! 

Read all about the impact of oil prices on the indian economy and financial markets!

How should an investor think about investing in US equity from a medium to long term perspective. Read about this in an FAQ about US equity investing.