Money can work

Tata Motors is an Indian automobile manufacturing giant who makes everything from the cheapest car to trucks to military vehicles! They even own Jaguar and Land Rover! If you judge by the sales revenue, Tata Motors is much bigger than Maruti Suzuki!!! But, Is it enough if a company is big and has more sales?? Is it enough if a company makes great cars?? Tata Motors is a classic case to prove just the opposite!! Keep reading,.. Fundamental Analysis 1. Growth Story Tata motors has been aggressively launching new passenger vehicles in India hoping for a turnaround from a record loss-making track record. On the other hand, Jaguar Land Rover has been investing heavily on new models and has promised to the goal of electrification of every single model by 2020. Just remember couple of important facts: More car models DOES NOT mean more sales! More sales  DOES NOT  mean more profits! This is exactly what's happening with Tata Motors. Last 5 y...

Basics Let's say you invested all your money by picking 10 different stocks in the automobile sector. If the government announces any policy like changes in taxes, upgraded crash norms, new engine standards etc., this can have a huge impact on the company's performance, at least in short term. Imagine, if you had diversified your investments across sectors like automobiles, IT, agriculture, construction, Retail, Oil & Gas etc. you wouldn't have got affected as much as you have in the first case. In simple words, Diversification means spreading your investments across different companies/sectors/countries. FYI, there are some mutual funds which invest in countries like United States, China, and other emerging markets. You can take advantage of these funds for diversification across countries as well. Known Benefit Common sense tells us that diversification helps us reduce the risk of our investments. Thus, the probability of you losing your capital...

Introduction Maruti Suzuki  is the manufacturer of the most popular cars in India. It is a subsidiary with ownership of 56% by its parent Suzuki Motor Corporation (A Japanese firm). Maruti Suzuki has given some of the best selling cars in the past including Maruti 800, Omni, Alto, Swift, Swift Desire, Ciaz and Baleno. Fundamental Analysis 1. Growth Story Maruti Suzuki is a true  market leader with a lion's share of 50% ( source ) in Indian Passenger Vehicle (PV) segment. This simply means that one in two cars sold in India is made by Maruti Suzuki!  In the last five years, the company has doubled its revenue and profits which is an incredible performance.  Recently, Suzuki also announced a partnership with Toyota on various aspects to improvise the capacity utilization, improving sales and global expansion (Africa). Maruti Suzuki is definetly posied for growth looking at the long term. 2. Shareholding Pattern Promoter (Suzuki Motor Corp...

Introduction Suzlon Energy   is a wind turbine supplier based in Pune, India. Formerly ranked by MAKE as the world's fifth largest wind turbine supplier, it has since dropped out of the Global top ten rankings (as of 2014) due to extensive losses and inability to repay debts. Interesting Facts Suzlon operates in over 18 countries and 6 continents! Has over 17,000 MW capacity worldwide. Price of the share has fallen 97%  from its peak since 2008 Fundamental Analysis 1. Growth Story Suzlon has been struggling over the past many years to maintain consistent revenues and profits. Recent changes in the governance policy has damaged the company's scope for making decent profits. Government of India has decided to proceed with auction regime, which has led to extreme competitiveness among companies and thus losing the pricing power! Lately, Solar energy has proven that clean energy need not be expensive by beating existing non-renewable energy prices by h...

Introducing Stock Score Card! At Money Can Work , we always strive to educate our users with the best possible content to help you grow your money. We are introducing a new Blog Series called #StockScoreCard , where we will try to share the fundamental analysis of an individual stock based on the five multibagger magic mantras which we earlier discussed in this blog. Five Multi-bagger Magic Mantras: Growth Story ( link ) Shareholding Pattern  ( link ) Debts  ( link ) Return on Equity  ( link ) Valuation  ( link ) Hopefully, #StockScoreCard helps you decide either to Buy/Sell a particular stock. Please share your feedback, insights and suggestions at our facebook / twitter page. Check out our first  #StockScoreCard  - Vakrangee ( link )! Stay tuned!

You should never buy every single great stock!!! Yes, you heard it right! Don't ever buy a company's only because it is a great business! Just like you shouldn’t buy the next best phone from Apple or Google if it costs a Million. Even if you can afford to buy, you would be a fool to buy at that price! Luckily, every day stock prices vary and you just have to wait for the right price which you think is right and then hit “BUY”! Price is something everyone knows, but what is it really worth? There is a magic trick to find just that! In fact, all-time-greatest investor Warren Buffett first looks at the business, comes up with a price in his mind and then looks at today's market price of that stock! Sounds crazy, but the technique is very simple and anyone can apply it. Guess the price of Non-Banking Stocks: Compute the sum of last 4 quarter's consolidated EPS Multiply with a P/E multiple which you think is appropriate based on the bu...

It is always good to see companies showing BIG profits! But, how much profit is good profit? Company A might do 10 crores of profit Company B might do 100 crores of profit This doesn’t always mean Company B is better than Company A More profits does not always mean a better company! Instead of looking at it in just absolute terms, what is more important is to look at in relative terms i.e., for every 100 rupee of shareholder's investment what is the profit that the company is making! Example: Let's say Company A and B reports net profit of INR 500 crores. In absolute terms, both companies are equal in terms of profitability. But in relative terms, Company A could be making 30 INR profits for every 100 INR investor’s equity. Company B could be making just 10 INR profits per 100 INR of equity. Return on Equity (RoE) of Company A is 30% but Company B is 10%. Hence, Company A is a better pick than Company B Return on Equity is a key metric in identifyi...

Debts (loans) are sometimes necessary to run a business, to acquire companies and for manufacturing capacity expansion. But, very high debts can literally kill a company! It is better to go to bed hungry, than to wake up in debt! Think about this, would you invest if Vijay Mallya started a new venture? Lol 😂 Stay away from companies whose debt/equity ratio is more than 1 In fact, I personally wouldn’t invest if debt/equity ratio is more than 0.5 Let's take an example of a company with good debt/equity Ratio : Maruti Suzuki ( link ) Now, let's take a bad example : Idea Cellular ( link )   Worst Case Scenario There are few companies with negative debt/equity ratios, like Suzlon ( link ). Stay away from such companies too! Negative debt/equity ratio means the company's net worth is negative. Very few bankers extend loans to such a company with a negative net worth unless there are extenuating circumstances, and there are assets th...

Shareholding pattern in simple words explains how much of the company's ownership is held by the promoters (Owners of the company) and how much is held by the public shareholders. Imagine a company where promoters (Owners) themselves are selling out their own stocks ! This is a BIG red signal! How can outside people be confident about the stock’s future if the promoters themselves are exiting the stock! On the other hand, if promoters are super-confident of the company’s future revenue and profits growth they themselves will buy more stakes from the open market . They are betting their own money on the company's growth! Imagine how confident they would be about the potential ahead of them! This is a BIG green Signal! A quick check can help you understand the shareholding patterns and make a decision. Here is a good shareholding pattern of a company - Maruti Suzuki ( link ) Here are the shares pledged (that can be sold by promoters any...

First and foremost you need a company which is growing for picking a multibagger! I know, this is a no brainer but there are thousands of people  investing in companies making huge losses year after year. They are hoping for a turnaround story, but never happens!  Example: Suzlon I would suggest you to stay away from such companies. You need stocks which are growing both in terms of revenue and in profits . Revenue and profits may not always dance together 😜 Case 1 : Many companies are growing both in terms of revenue and profits. This is the kind of companies you should look out for. Case 2 : Many companies are making losses in terms of both revenue and profits. I would suggest you stay away from such companies. Case 3: Few companies are growing in revenue, but profits are NOT growing, due to unnecessary expenses or higher raw material costs. Case 4: Few companies are growing in profits but revenue growth remaining stagnant. This sounds ver...

Ever wondered about the secret recipe of a great stock from Warren Buffett? Ever wondered what drives the stock price to grow steadily for years to become a multi-bagger? We hear all day stock suggestions from SMSs, TV and from apps/websites like MoneyControl and BloombergQuint. World around us has a lot of noise in terms of stock suggestions. Can you find a multi-bagger from this hell of suggestions? Can you decide if the stock suggested is a great stock or not? Here are 5 simple n easy mantras to find out just that:   The Growth Story ( link ) Shareholding Patterns ( link ) Debts, Loans and Mallya ( link ) Return on Equity ( link ) Valuations ( link ) This is a five-part series of blog posts, please check out for all 5 posts.

A lot can happen in just a year! # Large Cap Stock Returns (%) 1 Adani Transmission Ltd 356% 2 Future Retail Ltd 337% 3 Edelweiss Financial Services Ltd 219% 4 Motilal Oswal Financial Services Ltd 213% 5 Vakrangee Ltd 198% 6 Titan Company Ltd 178% 7 IIFL Holdings Ltd 152% 8 DLF Ltd 133% 9 TVS Motors Ltd 111% 10 Sun TV Network Ltd 111% In fact, average return on these stocks is 200.8%   i.e., your investment was TRIPLED in 2017 !