The purpose is to master fundamental analysis by detecting affordable quality stocks through financial document assessment and ratio analysis combined with cultural assessments.

Why Analyze Stocks?
Electric stocks provide superior profits than passive securities yet this strategy demands careful investment research.

For example:
During its 30 years of operation Infosys turned ₹10,000 initial public offering money into ₹5.4 crores.
Yes Bank (2018–2025): Fell from ₹400 to ₹18 due to mismanagement and bad loans.
To excel at stock selection investors should study how well a company performs financially and sits in its market sector with mastery of its leadership team.

Fundamental Analysis Framework
Step 1: Financial Statements
The reports can be accessed through Screener.in and Moneycontrol.
The balance sheet presents information about both assets and liabilities with debt levels as one example.

Income Statement: Revenue, expenses, and profits.
A cash flow statement provides information about funds derived from operational activities combined with investment and financing operations.
Example – Reliance Industries (2025):
| Metric        | Value (₹ Cr) |
| Revenue    | 8,79,100 |
| Net Profit  | 69,192    |
| Total Debt | 4,58,991 |
| Operating Cash Flow | 1,58,788 |
The ₹4.58L Cr debt at Reliance Industries functions as a counterbalance against its robust cash flow of ₹1.58L Cr.

Step 2: Key Ratios (You can add all ratios to analyze any stock quickly.)

a. Valuation Ratios
Price-to-Earnings (P/E):
The Price-to-Earnings ratio divides the present stock worth by Earnings Per Share.
Example:
TCS: P/E = 27 (expensive, but stable).
Tata Motors: P/E = 7.56 (cheap, cyclical industry).
Price-to-Book (P/B):
P/B = Market Price / Book Value per Share
The market values HDFC Bank stock at P/B ratio 3.5 times when compared to Yes Bank stock which trades at P/B ratio 1.2. Yes Bank at P/B = 1.2 pre-collapse.

b. Profitability Ratios
Return on Equity (ROE):
ROE = Net Income / Shareholder Equity * 100
Good ROE: >15% (e.g., Asian Paints = 31.4%).
Poor ROE: <10% (e.g., Vodafone Idea = negative).

c. Debt Ratios
Debt-to-Equity (D/E):
D/E = Total Debt / Shareholder Equity
Safe: <1 (e.g., Nestlé India = 0.02).
Risky: >2 (e.g., Adani Green = 8.5).
d. Dividend Yield
Formula:
Dividend Yield = Annual Dividend per Share / Stock Price * 100
The share dividend payout of Coal India spans between 5% and 8% and ITC provides returns between 3% to 4%.

Step 3: Qualitative Factors
Management Quality:
Organization leadership succession should be evaluated (such as HDFC Bank’s leading executive Sashidhar Jagdishan when compared to IL&FS’s failed management).
The practice of promoter share pledging becomes a red flag when the level surpasses 50 percent (such as Zee Entertainment).

Industry Trends:
Tata Power operates in a growth sector through renewable energy.
The company finds itself challenged by price competition in the telecom market (Bharti Airtel experiences escalating pricing pressures).

Competitive Advantage (Moats):
Brand: Titan (trusted jewelry/watch brand).
DMart implements cost leadership through its low-cost retail model.

Valuation Methods
a. Discounted Cash Flow (DCF)
To calculate the real worth of stocks forecast the anticipated cash flows into the future.

no need to involve in calculations you can get it easily on screener.in

but if you wish to calculate intrinsic value of companies with ease
Tools: Use DCF Calculator for simplified analysis.

b. Relative Valuation
Peers need evaluation through ratios including P/E, P/B and EV/EBITDA etc.
Example – FMCG Sector (2025):
| Company | P/E | ROE | Dividend Yield |

Tasks for You 😊
Analyze a Stock:
Users can find Tata Motors or ITC stock information by accessing Screener.in website.
Check the ratios P/E, ROE and D/E against typical sector performance levels.
Study Annual Reports:
Read the “Management Discussion” section in Infosys’ Annual Report through a document download.

Start a Mock Portfolio:
Through Trendlyne users can establish a ₹10L virtual stock collection consisting of 5 different investments. OR you can create your mock portfolio by editing these google excel sheet.

Common Mistakes to Avoid
-Secondly investors should not pay more than 50 times the stock price to purchase shares of companies which lack solid fundamental factors.
-Unpayable debts at Jet Airways and similar organizations caused the collapse of both entities.
-Investors should steer clear from stock tips obtained through Reddit and WhatsApp if they lack proper investigation.

Key Takeaways

Margin of Safety: Buy stocks trading below intrinsic value (e.g., P/B <1.5).
2. Quality > Quantity: Focus on 10-15 high-conviction stocks.
3. Patience: Hold winners long-term (e.g., Page Industries delivered 25% CAGR for 20 years).

FAQs for Indian Investors
– “How much cash should a company hold?”
Ideal cash ≥ short-term debt (e.g., A healthy amount of cash maintained by Britannia exceeds its short-term debt obligations by ₹2,500Cr which exceeds ₹300Cr.).
– “How to handle stock volatility?”
Take advantage of market fluctuations to buy good stocks because Asian Paints decreased by 30% in 2020 yet recovered to double after that point.
– “Where to learn advanced analysis?”
Books: The Intelligent Investor (Graham), Common Stocks and Uncommon Profits (Fisher).📉📈