Analysis of Stock - Part 2

I dont know why but the site www.blogspot.com was not allowing me to save whole article in one post. So have to add another post which is continuation of 'Analysis of Stock'.

After checking the Fundamentals and Griwth History of the company, we need to check the current fundamentals of the company. Following part will explain which and how those parameters are to be analyzed..

Promoter Holding:

Now that it has passed the test of the Growth concern, check whether the promoter holding is good. Check promoter holding of last few quarters, whether they have bought, sold or kept their holding intact. If they have bought the shares, it’s a good sign. If they have sold the stock, it is not a very good sign. 

Shares Pledged By Promoters:

We need to consider Pledged Shares while checking Shareholding Pattern. Please search Google for more details regarding Pledged shares. It should be negligible (Best if there are no pledged shares). Also positive if the Pledged shares percentage is decreasing.

This page will show the total number of pledged shares. In Neo Corp’s case, they have reduced the number of pledged shares. So once again, that’s positive.

FII's/DII's Holding:

Invetsments by FII’s and DII’s adds better sign for the company.

Public Shareholding more than 1% :

Check the Top Public shareholders, if any Ace investors have invested. It is also taken as a positive sign.

Study Balance Sheet and Cash Flow:

You need to study it as I can’t explain it here. You need to learn it from the internet or some books. Check if the company gives dividend when they have cash with them.

Check the Company's website:

The basic info regarding any company nowadays is displayed on its website. There are many companies which don’t even have website or has very poorly managed website which is not updated for years. I don’t like the companies which doesn’t update the website and keep up-to-date information. Website need not necessarily be fancy but the basic developments happening should be listed there. You also can find the clientele there (Clients list). If its all good , move ahead.

Check the Corporate Governance:

Many companies have black background associated with it due to the stock operators like Ketan Parekh, Nirmal Kotecha etc. or some other issue, like IPO listing fraud. Check the clarifications of the company regarding any issues if they have encountered this type of issues and check if the issue is resolved.

Most Important Parameters:

You can check Dividend history on chart directly.

For all the parameters below, you need to study well and this may take time. Better to get it analysed by expert if you are unable to solve it. This parameters will tell whether the share is worth buying.

• Lower P/E than Industry P/E is a very good sign to BUY.
• Check the Book Value of the company. If the Book Value is higher than the current Share price, its again good indication to BUY.
• Price/Book if less than 1.00, shows that the share is undervalued.

There are many other rules. Not all of them matters, it varies depending on share.

If you find a share that have all the things positive, 

Congratulations!!! You have found a multibagger. Share that stock as much as possible so that all the investors can take benefit of the research done by you.


If anyone wants the copy of this file (Manual) in Microsoft Word format, click link below to download  
ShahStocks Stock Analysis Tutorial