Selecting a company
If you are a beginner, then consider the following –
If you are just starting with stock analysis, it is best to avoid complex companies. Reliance Industries is one example of this – even experienced investors may have difficulty modelling the company. Instead, go for something simpler to grasp.
Pick a manufacturing company over a service-oriented one; it is usually simpler to comprehend concepts such as production quantity, materials and stock levels. The ideas underlying services can sometimes be unclear.
The company should have 1-2 products that make up its revenue. When there are more products available, the degree of complexity increases. Take an example of an FMCG company: With hundreds of different items, this kind of business must manage many dependencies and can be challenging to model correctly.
When selecting an annual report from a company, it is better to opt for one that offers as much information as possible. Infosys stands out amongst its peers in this respect, assuring you of reliable data which will reduce the number of assumptions you need to make in your model – overall, a far more beneficial approach.
Make sure that the company you select is coherent in its yearly reports. Allow me to explain this. Suppose I choose a business which manufactures and sells cell phones. The business operates in India and Sri Lanka. In its initial annual report, the firm specifies the number of units sold in both nations and the revenue made from them. Nonetheless, during the second annual report, it just reveals the revenue earned but refrains from giving out information on the total units sold; an inconsistency with reporting, making it difficult to progress with the model.
Steer clear of the banking and financial services sectors, as well as NBFCs. These areas can be quite intricate with a multitude of regulatory complexities. Thus, the model we’ll learn may not be suitable for the BFSI industry. Be mindful of this.
Before selecting a company to use as a model, keep these concepts in mind. As a first example, I recommend replicating the model from this module on your own.
Throughout this module, we will have a principal model operating and several auxiliary models. You must comprehend the setting in which these different models will be employed.
The principal model – To begin, we will start with an empty excel workbook and create the model gradually. During this exercise, we will select a company and stick with it throughout the entire duration of the project.
I’ll use 1 or 2 different businesses to give extra detail in certain sections of the key model. This will help you in gaining a deeper understanding.
Consider it as learning to be an expert chef. The final goal is to churn out amazing meals, yet you must also take some time and hone your knife skills to cut vegetables quickly.
*All subscription pricing plans mentioned across the website are exclusive of 18% GST
By signing up, you agree to receive transactional messages on WhatsApp. You may also receive a call from a BP Wealth representative to help you with the account opening process
Disclosures and Disclaimer: Investment in securities markets are subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in the above newsletter are for educational purposes and should not be construed as investment advice by BP Equities Pvt. Ltd. Investors should consult their investment advisor before making any investment decision. BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), IN-DP-CDSL-183-2002 (CDSL), INH000000974 (Research Analyst), CIN: U45200MH1994PTC081564. Please ensure you carefully read the Risk Disclosure Document as prescribed by SEBI | ICF
Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.
Pay 20% upfront margin of the transaction value to trade in cash market segment.
Investors may please refer to the Exchange’s Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard.
Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month.
Issued in the interest of Investors
Communications: When You use the Website or send emails or other data, information or communication to us, You agree and understand that You are communicating with Us through electronic records and You consent to receive communications via electronic records from Us periodically and as and when required. We may communicate with you by email or by such other mode of communication, electronic or otherwise.
Prevent Unauthorised Transactions in your demat account –> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from CDSL on the same day………………….issued in the interest of investors.
KYC is one time exercise while dealing in securities markets – once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor’s account.
BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), INZ000030431 (MCX/NCDEX), IN-DP-CDSL-183-2002 (CDSL), INH000000974 (Research Analyst) CIN: U45200MH1994PTC081564 BP Comtrade Pvt Ltd – SEBI Regn No: INZ000030431 CIN: U45200MH1994PTC081564