TRADERS FOLLOW THE PRICE WHEREAS INVESTORS FOLLOW THE VALUE IN BUSINESS !
None of the below factors alone determine the fundamentals of any business its the collective approach
Do you know the promoters of the companies where you are investing ?
Check their Credibility & Past experience in business.
Is there a monopoly or Entry barrier in the business ?
Strong Moat, Monopoly, Duopoly or Dominant position, Some Entry barrier in business is highly recommended .
How is the debt on the books of the company ?
Debt free or virtually debt free, Asset light businesses are recommended .
How is the reserves ?
Reserves should always be more than the debt on books .
Now check the FREE CASH FLOWS
The most important Parameters of fundamentals is that the net profits are reflecting on books as positive free cash flows.
How is the sales & net profits ?
Sales & Net-profits should always be growing Year -on- year .
Look for Futuristic business
Industry should in be growing phase .
How many outstanding shares ?
Preferably less than 500cr. More the outstanding shares of the company lower can be the EPS.
Did you check the ROCE ? ( Return on capital employed )
To understand the utilisation of funds overall raised by the company - Preferably more than 18% ( Other than banks & NBFC )
Whats the ROE ? ( Return on equity )
To understand the utilisation of funds raised by equity - Preferably more than 15% ( Other than banks & NBFC )
Check the PE ? ( Price to earnings )
Let's not go into formulas - Preferably PE should be less than 150 on higher side for a fast growing company OR Simply compare it with Peers .
Have you checked the shareholding pattern ?
Majority with Promoters, FIIS & DIIS signifies strong share holding pattern. Check the change in shareholding pattern every quarter .
Is the Promoter holding pledged ?
If the promoter has pledged their shares more than 10% on higher side it's time to exit . The best example will be 0% pledged !
Whats the face value ?
FV of 10 may possible results in split resulting in extra shares to the shareholders .
Have you checked the capital expenditure plans ?
Imp. to know company plans for growth eventually increase in sales & Profits .
All the above information is available on NSE & BSE