It’s ratio of

Market Cap/10 Year Free Cash Flow

https://t.co/pPhgH6LcZ1 #lauruslabs #laurus

Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." #HappiestMinds
Ashok Soota, is the largest shareholder, holding 43% of shares outstanding. In comparison, the 2nd and 3rd hold about 13% and 3.6%

#HappiestMinds Skin in the game ?

Top 2 holds around 55% stake which is ₹92b worth of shares in the ₹186b company.

42.5% => Ashok Soota [ ₹71.8b ]
12.66% => Ashok Soota Medical Research LLP [ ₹21.4b]

Top 25 shareholders own 73.71% of the company
#happiestminds

STOP focusing on Profit

START focusing on Cash Flow

Cash Flow Statement 101:

Every company has 3 reports in its financial statements

1. Balance sheet
2. Income statement
3. Cash flow statement

Most people focus on the Income Statement to look at PROFIT

There is nothing wrong with this…

But profit, isn’t CASH FLOW

Profit is an accounting measure

It doesn’t tell you how much MONEY actually came into the business

Sounds confusing?

Let’s look at an example:

In 2021 Google’s profit was: $76 billion

Thread Threadexplaining #PE Ratio & #PEG Ratio & its use in #FundamentalAnalysis

(Must read for #FA learners)

🙏Like & RT to spread learning with all🙏

Views Welcome👉@dmuthuk @Vivek_Investor @datta_arvind @caniravkaria @FI_InvestIndia

#FundamentalAnalysis #StockMarket

1⃣

Price to Earnings (#PE) ratio, also known as price multiple or earnings multiple is the ratio obtained by dividing the current share price by earnings per share (#EPS).

#StockMarket #Investing #FundamentalAnalysis

2⃣

P/E ratio is a reflection of the market's opinion of the earnings capacity & future business prospects of a company.

Companies which enjoy high investor confidence & have a higher market standing usually command high P/E ratio.

#StockMarket #Investing #FundamentalAnalysis

3⃣

On the face, it would seem that companies with low P/E ratios would offer most attractive investment opportunities. This is not always true.

Companies with high current earnings but dim future prospects often have low P/E ratio.

#StockMarket #Investing #FundamentalAnalysis

4⃣

As an #investor your primary concern is with future prospects of a company & not so much with its present performance.

This is why companies with low current earnings but bright future prospects usually command high P/E ratio.

#StockMarket #Investing #FundamentalAnalysis

One of the best debates I have seen in recent history between @SunilBSinghania and Saurabh Mukherjea.

TOPIC: Has P/E lost its relevance?

I resonate more with Sunil’s side. Here’s a thread 🧵 on the main points made by him:

@varinder_bansal @safiranand @myvaluepicks

1/ Importance of PE

PE is not the only factor but an important factor.

Ultimately the growth has to justify how much PE are you paying for the company.

There cannot be an unlimited PE multiple based on some xyz parameters.

2/ Hindsight Bias:

In hindsight we can say that from 2001 to 2021, a company grew at 25 % and we should have given a very high PE to it.

But on the day when you buy, you don’t know that the company is going to grow at 25% for the next 20 years.

3/ Millennial preference:

Things have become more competitive.

New generation don’t really care much about legacy.

Convenience and affordability matters more.

The longevity and sustainability of growth has changed dramatically.

4/ Company that require a big investment - There is opportunity to invest big.

Company 1: Mkt Cap of 50 cr
Company 2: Mkt cap of 1 lakh cr

50c r company can become 3x, 1 lakh cr company cannot become 2x.

On absolute basis you end up making 5 cr vs 5k cr in 1lakh cr company.

Thread 🧵explaining #ROE & #ROCE and its use in #FundamentalAnalysis

(Must read for #FA learners)

🙏Like & RT to spread learning with all 🙏

Views Welcome 👉 @dmuthuk @Vivek_Investor @datta_arvind @caniravkaria @FI_InvestIndia @AdityaD_Shah

#FundamentalAnalysis #StockMarket

1⃣

Return on Equity (#ROE) and Return on Capital Employed (#ROCE) are two important Financial Ratios used in #FundamentalAnalysis of Stocks.

#StockMarket #Investing

2⃣

Return on Equity (ROE) is the ratio of Net Income (Net Profit) of a company and it’s Total Equity (Shareholder's Equity).

Here - Shareholders Equity = Share Capital + Reserves & Surplus.

#StockMarket #Investing #FundamentalAnalysis

3⃣

#ROE is a measure of how much net profit a company is making for every rupee invested by its shareholders in the company.

It can be said that higher the ROE, better it is for the equity shareholders. It tells shareholders about how effectively their money is being used.

4⃣

However, you should not trust high ROE blindly. Biggest drawbacks or weaknesses of ROE is that it completely ignores debt.

Hence for companies having high levels of debt, ROE will give a higher but misleading value & therefore we need to look at #ROCE along with #ROE.

I see a lot of YouTubers treating stock-based compensation as a "non-cash" item they can disregard, but it's essentially a company paying its employees with shareholder money; if they used money from selling shares to cover salaries, you'd see just how real of an expense it is