⚠️𝗥𝗲𝗱 𝗙𝗹𝗮𝗴𝘀 to look out fr in Financial Statements – Part 4

What is 𝗗𝗲𝗽𝗿𝗲𝗰𝗶𝗮𝘁𝗶𝗼𝗻?

➱ How depreciation manipulation is red flag?
➱ Popular methods of calculating it
➱ Case study of Century Plyboards
➱ How to analyze depreciation tricks like a pro? 𝗪𝗵𝗮𝘁 𝗶𝘀 𝗗𝗲𝗽𝗿𝗲𝗰𝗶𝗮𝘁𝗶𝗼𝗻?

You buy car, & its value decreases each yr due to use. This reduction in value is depreciation🚗

It measures the reduction in the value of a fixed asset due to usage or obsolescence over time. Think of it as wear and tear for your assets

How to find if a share is 𝗢𝘃𝗲𝗿𝘃𝗮𝗹𝘂𝗲𝗱 𝗼𝗿 𝗨𝗻𝗱𝗲𝗿𝘃𝗮𝗹𝘂𝗲𝗱? 🤔

- 𝗘𝗩/𝗘𝗕𝗜𝗧𝗗𝗔 𝗥𝗮𝘁𝗶𝗼 is here to help⤵️

#stockmarketcrash #finance Imagine you're buying a restaurant:

⇨ EV is like total cost (restaurant price + any loans - cash in the till)

⇨ EBITDA is how much money the restaurant earns before paying bills, taxes, etc.

EV/EBITDA = Is the restaurant worth the cost based on its profit?

4 Important Terms Related to Stock Market:

1️⃣ Market Value
2️⃣ Face Value
3️⃣ Book Value
4️⃣ Intrinsic Value

Lets learn each one of them⤵️

#StockMarket #investor 1️⃣ Market Value

It is the current price at which an asset or company is trading in the market. It represents the collective valuation of investors based on financial performance, growth prospects, market sentiment, etc.

6 Metrics to Analyse Mutual Funds:

1️⃣IRR
2️⃣ROI
3️⃣XIRR
4️⃣CAGR
5️⃣Absolute Returns
6️⃣Rolling Returns

Let's understand each one by one⤵️

#investing 1️⃣IRR

It measures profitability of mutual fund investment in terms of an annualised rate of return.

Formula:
𝑃𝑉𝑖𝑛𝑓𝑙𝑜𝑤𝑠 = 𝑃𝑉𝑜𝑢𝑡𝑓𝑙𝑜𝑤𝑠

*PV = Present Value

In simpler terms, it equates the present value of cash inflows to the present value of cash outflows.

Top 5⃣ factors to keep in mind while evaluating a Mutual Fund. 💸

• Exit Load
• Expense Ratio
• Portfolio Turnover ratio
• Asset Under Management
• The reputation of fund house & fund manager

Let's discuss them in detail. 🧵 ⤵

#StockMarket #mutualfunds 1️⃣ Exit Load

The exit load is the fee that the AMC charges the investors while redeeming the funds.

How to analyse Banking Stocks?

• Net Interest Margin(NIM)
• Return on Assets(ROA)
• Non Performing Assets(NPAs)
• CASA Ratio
• Provision Coverage Ratio
• Capital Adequacy Ratio
• Loan to Deposit Ratio

Let's analyse each one in detail 🧵

#stockmarkets #Finance 1⃣Net Interest Margin(NIM):

NIM is tool used by both investors & bankers to measure profitability. It is diff betwn interest earned frm loans & the intrst paid out to depositors. It can be used as parameter to measure fund manager’s efficiency in managing firm’s assets.

Vascon Engineers Ltd just bagged orders totaling ₹600 crores in the last 48 hours! 🚀

With a market capitalization of ₹1,600 crores, this company now have an impressive order book of ₹3,000 crores! 😱

Read this thread for all the details! 🧵👇 Before talking about the order book, it's essential to understand the company's core operations. The company operates in two sectors:

👉 EPC
👉 Real Estate

You can see, the majority of revenue flows in from the EPC segment.

But what sets these two segments apart? 🤔

IT Industry: Simplified👨‍💻

A Thread 🧵>>>

#stockmarkets #Finance 1️⃣Software Services Companies:

These companies offer software development, maintenance, and testing services.

They work on projects for clients worldwide, often providing customised solutions.

Companies -
• TCS
• Infosys
• Wipro
• HCL Technologies

Investing in top-quality stocks with high valuations will only generate average returns. 💰

Creating wealth requires the perfect synergy of EPS growth and PE expansion. 📈

Confused?

Read this 🧵 for clarity! Let's explore three instances to grasp how wealth has been generated over the past five years:

1️⃣ EPS growth-driven returns.
2️⃣ PE expansion-driven returns.
3️⃣ Combination of PE expansion and EPS growth-driven returns.

Financial Service Industry: Simplified🪙

A Thread 🧵⤵️

#finance #stockmarket 1️⃣Asset Management Companies (AMCs):

AMCs are like money experts who grow your savings by investing in different ways and charge a fee for doing this.

Companies -
• HDFC Asset Management Company,
• Aditya Birla Sun Life AMC,
• Nippon Life India Asset Management.

Profit margins play a pivotal role in the success of B2C businesses. 📈They contribute to its rapid expansion compared to competitors. 🔝

Discover how Metro's strong profit margins set it apart as a top performer, outshining even the footwear giant Relaxo. 👟🏆

A thread 🧵 👉 In FY19, Relaxo did ₹1075cr more sales than Metro. Now, in FY23, gap is ₹655cr.
👉 Initially, Relaxo had higher op. profit. But in FY23, Metro's op. profit is double of Relaxo's.
👉 Since FY19, Relaxo's PAT: -3.13% CAGR, Metro's PAT: 23.68% CAGR.

Why Metro is outperforming?

Inventory Turnover Ratio: Simplified⤵️

Ek Dhaga 🧵

#StockMarket #Finance What is the Inventory Turnover Ratio?

In simple words, the Inventory Turnover Ratio measures how quickly a store sells its inventory and restocks it.

It shows how efficiently a shop manages its goods.

When retail investors analyse a company, they usually focus on things like revenue growth, profit margins, ROCE, and ROE. However, they tend to overlook the Balance Sheet.

But why is it important to analyse the Balance Sheet?

Here is a thread 🧵 with an interesting example. 👇 This is the Profit and Loss Statement of RattanIndia Power, a company that generates power through thermal power plants in Maharashtra.

Although their operating profit has been growing steadily at a rate of 9.7% per year, the company is still making losses.

Why?
Think... 🤔

JP Morgan warns of a structural ER&D spending slowdown, impacting the valuation of big companies like LTTS, KPIT, and TATA ELXSI. 📉

As an investor, you should have these three questions in your mind.. 🤔

A detailed thread 🧵⤵️

#Quest What's a structural slowdown?
Does it affect all the sectors?
Are there any other types of slowdowns? 🤔

Let's see ⤵️

▶️ There are several types of slowdowns in companies across sectors, which are,

IDFC First Bank board gives approval to the merger of IDFC Ltd, IDFC Financial Holding Company Ltd, and the bank. 🤝

📉 Unexpected twist: IDFC First bank stock fell by 4%, while IDFC Ltd rose by more than 2%. 📈

What's the reason? 🤔

A detailed thread 🧵

The merger is approved only by the bank's board and the approval from RBI, SEBI, NCLT, and stock exchanges is still pending.

IDFC Ltd shareholders will receive 155 shares of IDFC First Bank for every 100 shares of IDFC Ltd.

Which is a better measure of Valuation: P/E or EV/EBITDA??? 🤔

Ek dhaaga 🧵⤵️

#stockmarkets #investment While valuing companies, analysts use different methods to determine if a particular company is undervalued or overvalued.

And two most commonly used ratios are the P/E ratio and EV/EBITDA ratio.

Before understanding which one is better, let’s understand these ratios⤵️

The P/E Ratio: Explained🧵⤵️

#stockmarkets What is P/E Ratio?

P/E Ratio tells us how much investors are willing to pay for each rupee of earnings generated by the company.

Let’s understand it with an example >>

Varun Beverages goes for Stock Split

What is a stock split? Impact & benefits.

A thread 🧵⤵
#Stocksplit #varunbeverages Varun Beverages got approval for a stock split on 2nd June via postal ballot.
VBL has a face value of Rs. 10, which will now be divided into a ratio of 1:2, making the face value Rs. 5.

Record date: 15th June 2023.

IKIO Lightening IPO Alert! 📢🚀

This IPO is making a buzz in the stock market.

A detailed thread on this IPO🧵⤵️

#StockMarket #IPOAlert The company is coming up with fresh issues along with the OFS.

The borrowed funds will be utilised to repay debts and invest in its own subsidiary, IKIO solutions pvt. Ltd.

The details of the IPO are as follows⤵️

🚨Breaking News: ₹2000 denomination banknote is set to be withdrawn.

However, these notes will retain their status as legal tender.

Let's understand what's going on in a simple way 👇

#2000rs #2000notes #rbi Q. What was the objective of ₹2000 banknotes?

A. The ₹2000 denomination banknotes were introduced in 2016 to address the currency requirement following the withdrawal of ₹500 and ₹1000 banknotes.

Printing of these notes stopped in 2018-19 as the objective was fulfilled.

Another Bank, another result🚨

SBI Bank's Q4FY23 results are in!

Standalone Net Profit of Rs 16,695 crores beats estimates. 🤑

A detailed thread🧵⤵️

#Q4FY23 #StockMarketindia #SBIQ4results SBI Bank has achieved a remarkable whopping 83% growth in standalone net profit, rising from Rs 9,113 cr YoY to Rs 16,695 cr in Q4.

Similarly, operating profit rose 25% YoY to Rs 24,621 cr