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Fundamental analysis of stocks in India: how to analyse a stock

The ratios that decide whether a stock is worth owning: EBITDA margin, ROCE, debt to equity, cash flow, promoter pledge and more. Each one has its meaning, formula and a worked example from the filed figures of the 24 listed Indian companies this site covers.

Already know the basics? Check a stock now

Go in order, or start with whichever question you have.

1

Profitability ratios

Is it a good business?

  1. EBITDA marginEBITDA margin meaning, formula and calculation
  2. ROCE (return on capital employed)ROCE meaning in stock market, full form, formula, good ROCE, ROCE vs ROE
  3. Asset turnover ratioAsset turnover ratio meaning, formula and ideal range
2

Cash flow and working capital

Is the profit real?

  1. Cash flow vs profitCash flow vs profit: why net profit rises but cash doesn't (CFO vs PAT)
  2. Working capital days and cycleWorking capital days meaning, working capital cycle formula, debtor and inventory days
3

Debt and promoter pledge

Is it safe?

  1. Debt to equity ratioDebt to equity ratio meaning, formula, ideal ratio, and what negative means
  2. Promoter pledgePromoter pledge meaning, pledged shares by promoters, good or bad
4

Quarterly results, order book and concall

What is coming next?

  1. How to read quarterly resultsHow to read and analyse quarterly results of a company
  2. Order book of a companyOrder book of company meaning, order inflow and book to bill ratio
  3. ConcallConcall meaning, what is concall in stock market, how to read a concall transcript
5

Put it all together: check a stock

Is this stock fundamentally strong? Six checks on one company, using the ratios above.

5/6
  • Return on capital: Looks strong
  • Cash: Looks strong
  • Debt: Looks strong
  • Margins: Looks strong
  • Pledge: Looks strong
  • Price: Look closer

Laurus Labs earns well on its capital, turns its profit into cash, borrows little, is holding its margins and has only a very small promoter pledge.

Look closer at its price against the sector.

See all six checks for Laurus Labs

Or type in the numbers of any other listed company on the full check.

More ways to use these ratios

Ask 5 questions, then investThe five questions every company page answers, and where each number comes from.Compare a company with its peersA ranked table of the measures above, then side by side.
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