Fundamental Analysis of a Company

Fundamental Analysis of a Company – Beginners Guide to Stock Market.

Fundamental Analysis of a Company – Beginners Guide to Stock Market. How to Do Fundamental Analysis of Indian Stocks to Buy Shares.

What is Fundamental Analysis of a Company

Analyzing the financial status, management, growth potential, market share and other fundamentals is called fundamental analysis of a company. In simple words, Fundamental Analysis of a company is study of basic fundamentals of a company that can decide its future and growth.

There are different companies competing within a industry in the Indian Stock Market. A company can fall in the category of a very attractive industry or sector but this is not a guarantee that the company will succeed. Learn: Stock Market Sectors

There are several examples where an industry is doing well but some companies within that sector is not doing well. On the other hand, there are examples where a company that fall under a poorly performing sector but the company is growing well and making profits.

Also Read:

• Stock Analysis using Value, Growth, Income and GARP
• How to Pick Best Stocks to Buy in India
• When to Buy or Sell Stocks

How to do Fundamental Analysis of a Company

When doing financial analysis of a company before buying its’ stocks, investors must look at both financial and non-financial aspects. Some of the points to consider while doing fundamental analysis of a company are as follows:

1. Company history and its line of business.
2. Product of the company and market demand for those products.
3. Market Share.
4. Top management of the company.
5. Patents and trademarks of the company.
6. Partnership with other companies.
7. Competition with other similar companies.
8. Future business plans and projects.
9. Market Cap – small, medium or large.
10. Volume of trade in stock exchange for the scrip.
11. Earnings-per-Share.
12. P/E ratio.
13. Growth in the past in terms of sales and profit.

Also Read:

• How Stock Market Works?
• Where to Open Demat Account Online in India?
• Right Time to Buy Stocks

How do you Find a Company’s Fundamental Analysis?

This Answer is very Simple and Easy that most Beginners don’t know. Here are the Super Easy Steps to Follow:

1. Visit BSE Website
2. In the Get Quote Section Type “Name of the Company”
   
3. On the LEFT side, you will Find Financial Report of the Company.
   
4. Now, Firstly of All Check – Quarterly and Annual Revenue. Is it Increasing, Decreasing or is Stable? If Revenue is increasing every quarter or Annually and is NOT is Negative then the Stock is Good to Invest.
5. Next Check Net Profit of the Company. If Profit is Increasing every quarter and annually, then the Stock is Good.
6. Next Check Company Debt and Reserve Capital. If Debt is Decreasing and Reserve Capital is increasing, then it is a Good Stock. If Debt is ZERO and Reserve Capital is Good, then it is a Golden Stock to Invest.
7. Next Check Share Holding Pattern. What Percentage of Shares is Held by Promoters and General Public. If Promoters Holding is Increasing every year, then it means that they have Faith in their Business and Company. Additionally, if Share Holding of FIIs is also increasing then it is an Excellent Stock to Invest.
8. Next Check the Stock PE Ratio and Industry P/E Ratio. If the Stock PE Ratio is 10 and the Industry PE Ratio is 30, then it means that the Stock has the Potential to Triple itself as the Industry PE is Triple of the Stock PE.
9. Next Check Book Value of the Company (Total Assets ÷ Total Number of Shares). Book Value Must Always be Much Higher than CMP of Share. Example – If CMP of a Stock is Rs. 95 and BV is 500, then the Stock is Safe to Invest.
10. Finally Check Bulk / Block Deals. Who are Buying Bulk Shares of the Stock. If Promoters or Mutual Fund Companies or FIIs are Buying More, then the Stock may be Good to Invest.

FAQs: Fundamental Analysis of a Company

Conclusion

Doing Fundamental Analysis of a Company before buying its’ stocks is the first step towards Investment in Stock Market. Do not jump blindly into the stock market. Do your homework first.

I hope you liked this Article. Please SHARE with others. Thanks!

Also Read:

• Best Investment Options for High Return
• Diversified Portfolio – Why?
• What is Equity Investment?
• Stock Market Terminology for Beginners
• Share Trading Mistakes to Avoid
• What is Intraday Share Trading?
• Top 10 IT Companies in India by Market Cap
• What is Demat Account?
• Types of Orders in Stock Market in India
• What is Short in Share Trading?
• Top 10 Companies in India by Market Cap
• What is Margin Trading in Share Market?
• Securities Lending in Share Trading
• Volatile Stocks – Should I Buy?
• Stock Market Trends and Signal – How to Understand
• How to Invest Like a Professional Expert?
• Indian Economy GDP Growth Rate in 2022