Skip to main content

Common fundamental terms used in the Indian stock market

Here are some common fundamental terms used in the Indian stock market, explained in simple language:

📘 Basic Fundamental Terms

  1. EPS (Earnings Per Share)
    → Profit earned per share.
    Formula: Net Profit ÷ Number of Shares

  2. PE Ratio (Price to Earnings Ratio)
    → Shows if a stock is overvalued or undervalued.
    Formula: Share Price ÷ EPS

    • High PE: Expensive or high growth expectation
    • Low PE: Cheap or less growth expectation

  3. Book Value
    → Value of a company per share if it is liquidated.
    Formula: (Assets – Liabilities) ÷ Number of Shares

  4. PB Ratio (Price to Book Ratio)
    → Stock price compared to its book value.
    Formula: Share Price ÷ Book Value

  5. ROE (Return on Equity)
    → How efficiently the company generates profit using shareholders' money.
    Formula: Net Profit ÷ Shareholders' Equity

  6. ROCE (Return on Capital Employed)
    → Measures efficiency of capital use (both equity + debt).
    Formula: EBIT ÷ (Equity + Debt – Current Liabilities)

  7. Debt to Equity Ratio
    → Shows how much debt the company has compared to equity.
    Formula: Total Debt ÷ Shareholders' Equity

    • < 1 is usually considered good.

📈 Growth & Profitability Terms

  1. Revenue / Sales
    → Total income from business operations before expenses.

  2. Net Profit / PAT (Profit After Tax)
    → Final profit after all expenses and taxes are deducted.

  3. Operating Profit / EBITDA
    → Earnings before interest, tax, depreciation, and amortization. Reflects core business strength.

  4. Profit Margin
    → Profit as a percentage of sales.
    Formula: (Net Profit ÷ Sales) × 100

💰 Valuation & Investment Metrics

  1. Market Capitalization (Market Cap)
    → Total value of all outstanding shares.
    Formula: Share Price × Number of Shares
  • Large Cap: ₹20,000+ Cr
  • Mid Cap: ₹5,000–20,000 Cr
  • Small Cap: < ₹5,000 Cr

  1. Dividend Yield
    → Return received from dividend income.
    Formula: (Dividend ÷ Share Price) × 100

  2. Face Value
    → Nominal value of a share (usually ₹1, ₹2, ₹10). Used for accounting and dividend purposes.

  3. Free Cash Flow (FCF)
    → Cash available after expenses and investments, useful for expansion or dividends.

🧾 Other Key Terms

  1. Promoter Holding
    → % of company shares owned by the founders/promoters.

  2. FII/DII Holding
    → Investment percentage by Foreign or Domestic Institutional Investors.

  3. Pledged Shares
    → Shares kept as collateral for loans.

  • High pledge = Risky

  1. Capex (Capital Expenditure)
    → Money spent on assets like land, buildings, machinery.

  2. Operating Margin
    → Profit from core operations as a % of sales.

Comments

Post a Comment

Popular posts from this blog

fundamental analysis of Suzlon Energy (as of FY2025)

  Here is a fundamental analysis of Suzlon Energy (as of FY2025) 🌿 Suzlon Energy – Fundamental Analysis 🧾 Company Overview Suzlon Energy is one of India’s leading renewable energy companies, primarily engaged in the manufacture and installation of wind turbine generators (WTGs) . It also provides operation & maintenance services (O&M) for wind farms. 📈 Key Financials (FY2025) Revenue : ₹3,700+ crore in Q4, showing strong YoY growth Net Profit (FY25) : ₹2,000+ crore (includes one-time tax credit gains) EBITDA (Annual) : ₹1,850+ crore with margins of around 17–18% Debt : Significantly reduced over the last 2 years; company is now almost debt-free Cash Position : Positive net cash (~₹1,900 crore), strong improvement ⚙️ Business Strengths Market Leadership Among the top players in wind energy in India Large installed capacity with a dominant market share (~30%+) Turnaround in Performance Shift from loss-making to consistent profitability Focus o...
2 comments
Read more

important points to remember before applying for an IPO (Initial Public Offering):

  Here are the important points to remember before applying for an IPO (Initial Public Offering) : ✅ Checklist Before Applying for an IPO 1. 🧾 Understand the Company Read the Red Herring Prospectus (RHP) . Know the company’s business model, revenue sources , and growth potential. 2. 📊 Check Financials Review the company’s profit/loss, assets, liabilities , and debt levels . Prefer IPOs from companies with consistent profits and low debt. 3. 🧍‍♂️ Promoter Background & Management Look at promoter experience and track record . Avoid companies with weak or controversial management. 4. 💰 IPO Valuation Check if the IPO is reasonably priced . Compare with listed peers (if any) using P/E, P/B, EV/EBITDA ratios. 5. ⏫ Use of IPO Proceeds Check why the company is raising money — growth, debt repayment, or exits? Avoid IPOs where money is mainly used for promoter exits . 6. 📈 Grey Market Premium (GMP) (Optional Indicator) GMP can hint at market sentim...
Post a Comment
Read more

fundamentally strong small-cap Indian stocks for long-term investment

Here are fundamentally strong small-cap Indian stocks for long-term investment (2025) , based on consistent financial performance, growth potential, and business fundamentals: 🔶 1. Fine Organic Industries Ltd Industry : Specialty Chemicals (Oleochemical-based additives) Market Cap : ~₹9,000 Cr Key Strengths : High ROCE and ROE (20%+) Debt-free with strong export presence Strong demand in food, plastics & cosmetics sectors Why Long-Term : Consistent profit growth, niche product base, global client base 🔶 2. Garware Hi-Tech Films Industry : Specialty Packaging Films Market Cap : ~₹3,000 Cr Key Strengths : Strong balance sheet, low debt Leadership in sun control & paint protection films Exports contribute ~70% of revenue Why Long-Term : High entry barrier, patented technologies, strong EBITDA margins 🔶 3. CAMS (Computer Age Management Services) Industry : Mutual Fund RTA Services Market Cap : ~₹10,000 Cr Key Strengths : Monopoly in mutual fund ...
Post a Comment
Read more