TCS Q3 - FY 21 numbers - beats street estimates. Has the tech up cycle begun?

Profits beat street estimates

India's largest software services firm Tata Consultancy Services on Friday reported 7.2 percent year-on-year (YoY) rise in consolidated net profit to Rs 8,701 crore for the December quarter. 

This can also be mentioned as TCS Q3 - FY 21 meaning TCS Q3 (Quarter 3 i.e. Sep to Dec 2020 quarter) for FY 21 (Financial Year 2020-21). 

The company's revenue came in at Rs 42,015 crore, up 5.42 per cent YoY and 4.68 per cent QoQ. TCS' revenue stood at Rs 39,854 crore in the corresponding quarter last year and Rs 40,135 crore in the preceding quarter of FY21.The revenue rose by 4.1 per cent QoQ and 0.4 per cent YoY in constant currency terms. In dollar terms, revenue grew at 5.1 per cent sequentially from $ 5.424 billion reported in Q2FY21. The firm said it was the strongest third quarter growth in 9 years.

Declares Interim Dividend

Further, TCS announced third interm dividend of Rs 6 per share.



The Tata Group firm said it has fixed January 16 as the record date to determine the eligible shareholders.Commenting on the Q3 performance, Rajesh Gopinathan, Chief Executive Officer and Managing Director of the company said: "Growing demand for core transformation services and strong revenue conversion from earlier deals have driven a powerful momentum that helped us overcome seasonal headwinds and post one of our best performances in a December quarter. We are entering the new year on an optimistic note, our market position stronger than ever before, and our confidence reinforced by the continued strength in our order book and deal pipeline."

Increasing IT spends helps revival in the Indian IT Industry

The Indian IT services sector is expected to return to high single-digit revenue growth in 2021-2022 galvanised by higher demand for digital transformation after a flattish 2020, according to Fitch Ratings.

In a new report titled 'Spotlight: Indian IT Services Sector', Fitch said the impact of the coronavirus pandemic is seen to be only moderate and short term, as customers focus on transforming their businesses digitally, moving services and work platforms online, and minimise spending on legacy services.

Pandemic will accelerate digital IT spends, it said. Most companies have reported robust deal wins that should support growth in 2021-2022, despite the revenue decline in the second quarter of 2020, said the report.

"The industry will continue to remain export-driven as it mainly serves US and Europe-based clients. We forecast the industry's revenue to rise by a high single-digit percentage during 2021-2022, after a relatively flat year in 2020," said Fitch report.

(Disclaimer : This blog is for information purposes only)

5 Psychology Traps that Investors Need to Avoid

Benjamin Graham once said that “an investor’s chief problem and even his worst enemy- is likely to be himself.” 

When it comes to investing, humans go through a ‘roller-coaster of emotions’ as shown below.

The Roller Coaster cycle of Investing (Courtsey : Credit Suisse)

This has led to the emergence of behavioural finance, a new field that aims to shed light on investors’ behaviour in financial markets.

5 important and common biases amongst investors 

Anchoring Bias 

Anchoring Bias occurs when people rely too much on a reference point in the past when making decisions for the future- that is they are ‘anchored’ to the past. 

For example, if you had a favourable return on a stock when you first invested in it, your perception on the future returns of stock is positive even when there may be clear signs indicating that the stock might take a dive. 

Herding

Also known as the mob mentality, is a tactic that was passed on from our ancestors and believes that there is strength in numbers. 

Ironically, this herding mentality among investors is the major reason for ‘bubbles’ in the financial markets. 

However, people are quick to dump stock when a company receives bad press or go into a buying frenzy when the stock does well.

As an investor, you should perform your own analysis and research on every investment decision and avoid the temptation to follow the majority.

Loss Aversion

Loss Aversion is when people go to great lengths to avoid losses because the pain of a loss is twice as impactful as the pleasure received from an investment gain. 

As emotional beings, we often make decisions to avoid a loss, this could involve investors pulling their money out of the market when there is a dip which leads to a greater cash accumulation or to avoid losses after a market correction investors decide to hold their assets in the form of cash.

Superiority Trap 

Confidence is an asset when it comes to investing in the stock market, but over-confidence or narcissism can lead to an investor’s downfall. 

It is important to remember that the financial market is a complex system made of many different elements and cannot be outwitted by a single person.  Overconfidence is the most dangerous form of carelessness. 

Confirmation Trap 

Confirmation trap is when investors seek out information that validates their opinions and ignores any theories that refute it.

When investing in a particular stock that believe will result in favourable returns, an investor will filter out any information that goes against their belief. 

For instance, an investor will continue to hold on to a stock that is decreasing in value simply because someone else is doing the same. The investors help validate each other’s reasons for holding on to the investment, -this, however, will not work in the long-term as both investors may end up in a loss. 

(Disclaimer : This blog is for information purposes only)

Asset Allocation and Risk Tolerance, the two important facets of investing

What is Asset Allocation?

According to Investopedia "Asset Allocation means spreading your investments across various asset classes. Broadly speaking, that means a mix of stocks, bonds, and cash or money market securities."

Maximizing Return & Risk 

The goal of allocating your assets is to minimize risk while meeting the level of return you expect. To achieve that goal, you need to know the risk-return characteristics of the various asset classes. The figure below compares the risk and potential return of some of them:

The rule of thumb is that an investor should gradually reduce risk exposure over the years, in order to reach retirement with a reasonable amount of money stashed in safe investments.

6 Golden rules of Asset Allocation 

Well known studies by Brinson et.al. (1986, 1991) concluded that "More than 90 percent of the variation in a portfolio's performance over time is due to its asset allocation". The studies further assert "… investment policy dominates investment strategy (market timing and security selection)." 

These findings have become the bedrock of financial planning discourses and have their fans and critics alike.

1. Rules over views : Views are beliefs formed over time and involve predictions about markets. They are based on assumptions about future outcomes. These views differ depending on one’s ‘conditioning’ and may or may not hold true. However, an asset allocation plan based on ‘rules’ or some pre-determined scientific formula which uses actual parameters, is likely to triumph over views and market outlooks.
2. Understanding Behavioural Biases : Investing is more behaviour than Math :Investment decisions are driven by biases and not necessarily facts. Empirical theories assumed that investors were rational beings and made economically sound decisions based on data. However psychologists who studied investment behaviour, realised that investors make decisions based on biases and emotions.
3. Low correlation amongst Asset Classes is important : When constructing a portfolio is very important to look at the correlation of the asset classes. Investing in positively correlated asset classes, is not advisable as both asset classes are likely to deliver similar returns and will carry similar risks.
4. Discipline to Rebalance weights systematically : Asset Allocation must never be at the mercy of ‘last one year returns’. With regular rebalancing across asset classes one can maximize the benefits of asset allocation.
5. Risk Tolerance and not just age : Risk tolerance is a combination of various factors such as one’s income, liabilities, number of dependents, financial goals, need for cash flows, savings, and age.
6. Taxation : Taxes are happy outcomes. In the obsession to avoid taxes – one may end up taking undue risks. 

Risk Tolerance 

Risk Tolerance is defined as the amount of risk the investor can tolerate before deciding to exit the market and usually depends on the investor’s financial situation, type, preference of asset class, time horizon, and purpose of investments. 

An investor needs to have an understanding of risk tolerance; otherwise, they may see a large movement in the value of investment and panic, which might cause to sell at the wrong time.

Individuals have different risk tolerances. 

Your risk tolerance is your ability and willingness to assume risk. 

Your ability to assume risk is based on your asset base, your time horizon, and your liquidity needs. 

In other words, your ability to take investment risks is limited by how much you have to invest, how long you have to invest it, and your need for your portfolio to provide cash—for use rather than reinvestment—in the meantime.

(Disclaimer : This blog is for information purposes only)

Steps to Stock Selection - for Investing in the Indian Markets

 “Long ago, Ben Graham taught me that ‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” -

Warren Buffett


A brief note on the Steps to select a stock to invest into in the Indian Stock Market 

1.Management of the company 

1. Efficiency and consistency of management (longevity as well..)
2. Strategy and goals of the company.
3. Execution Potential and consistency of execution. 
4. Insider buying and buybacks ( we do not like this) 
5. Perks and Compensation to Staff and Workers '
6. Transparency 

2. Fundamentals of the company.

1. Earnings per share (EPS)
2. Price to Earnings Ratio (p/e)
3. Price to Book Ratio (p/b)
4. Debt to Equity Ratio
5. Return on Equity 
6. Price to Sales 
7. Current Ratio
8. Dividend Track Record 
9. Sales growth and Operating Profit Margin

3. Do we understand the products and services offered by the company.  What we do not understand we do not buy?

4.Will people still be using the products and services of this company 10-15 years from now. (at least 5 years !)

5. Does the company have a low cost competitive durable advantage?

6. Does the Company have a MOAT

1. MOAT in stock market investing is a term coined by Warren Buffet.
2.  A moat is a deep, wide ditch surrounding a castle, fort, or town, typically filled with water and intended as a defense against attack. Some stocks have a similar moat around them. That’s why it’s really tough for its competitors to defeat them in its sector.

7.What  is the company doing that its competitors are not?

A portfolio based on these parameters does not necessarily track the stock market indices - but provides an equity investing portfolio which is consistent on returns and offers a lower risk within the equity asset class.  

On a risk return perspective it is certainly a theme in which your monies should be invested to start with.  Risk can then be further increased if returns are favorable. 

DISCLAIMER :  THIS BLOG IS FOR INFORMATION AND NOT TO SOLICIT ANY BUSINESS. PAST PERFORMANCE IS NOT AN INDICATION OF THE PERFORMANCE OF STOCK IN FUTURE. EQUITY STOCK INVESTING IS A WITH RISK INVESTING INCLUDING RISK ON CAPITAL INVESTED. PLEASE TAKE AN INFORMED DECISION BEFORE INVESTING IN A EQUITY STOCK.

India creates 11 unicorns in 2020 - the year of WuhanCoronaVirus

India has seen a record number of startups becoming unicorns in the year 2020. 

The year that began with shock of lockdowns 

The year which began with the fear of Wuhan Corona Virus spread all across the world saw the longest lockdowns ever.  This had a major impact on the economy - especially of India - as it imposed one of the strictest lockdowns. 
However release of liquidity (money) by Central Banks of various countries ensured that easy money was available to businesses. 
And many businesses, the ones sensing higher business due to lockdown, quickly went into expansion mode.

Indian Startups weather the storm

Some Indian startups managed to weather the storm, post impressive revenue figures and raise funding to gain a valuation of more than $1 Bn and enter the unicorn club.

In all, 11 Indian startups —  

1. Unacademy, 
2. Pine Labs, 
3. FirstCry, 
4. Zenoti, 
5. Nykaa, 
6. Postman, 
7. Zerodha, 
8. Razorpay, 
9. Cars24, 
10. Dailyhunt and 
11. Glance — 

became unicorns this year. As experts have pointed out, the core propositions of these startups were ones that actually solved challenges for individuals and businesses during the lockdown for a large portion of the year. 

3rd largest number of unicorns

India is home to 32 Unicorns, making it the 3rd largest country with most Unicorns. Delhi NCR, the city with most Unicorn activity, alone has 14 unicorns.

On an average it took 5.5 years for Unicorn companies in India to achieve the status of a "Unicorn"

Aileen Lee first wrote about Unicorns

According to Investopedia - A unicorn is a term used in the venture capital industry to describe a privately held startup company with a value of over $1 billion. The term was first popularized by venture capitalist Aileen Lee, founder of CowboyVC, a seed stage venture capital fund based in Palo Alto, California.

Aileen Lee first wrote about unicorns in the venture capital world in her article, "Welcome to the Unicorn Club: Learning from Billion-Dollar Startups." Here, she looked at software startups founded in the 2000s and estimated that only 0.07% of them ever reach $1 billion valuation. Startups that managed to reach the $1 billion mark, she noted, are so rare that finding one is as difficult as finding a mythical unicorn.

(Disclaimer : This blog is for information purposes only)

Eicher Motors - strong innovative business, powerful brand.

Eicher Motors Business 

Eicher Motors Limited is the listed parent of Royal Enfield, the global leader in middleweight motorcycles. 

The world’s oldest motorcycle brand in continuous production, Royal Enfield has made its distinctive motorcycles since 1901. 

Royal Enfield operates in India, and over 60 countries around the world with modern development facilities in Leicestershire, UK and Chennai, India. 

In addition to motorcycles, Eicher has a joint venture with Sweden’s AB Volvo - Volvo Eicher Commercial Vehicles Limited (VECV) - has pioneered modernisation of commercial vehicles in India and other developing countries. 

Production facilities 

Royal Enfield makes its motorcycles in Chennai, Tamil Nadu for the world.

VECV has a complete range of trucks and buses from 4.9-55 tonnes, and its integrated manufacturing plant in Pithampur, Madhya Pradesh is the global hub for medium duty five- and eight-litre engines for Volvo Group.

Aspirational

Royal Enfield (RE) remains an aspirational purchase with undiminished brand equity (consistent >90% market share in >250 cc motorcycle segment). 
Post-Covid volume prints have been under pressure. This is due to

(i) short-term pressures on discretionary spends and 

(ii) supply side disruptions in its manufacturing and value chain belt on account of the pandemic. 

Nevertheless, order book remains healthy (~1.25 lakh units as of November), with supply de-bottlenecking holding the key to quicker volume uptick. 

The company has continued to innovate on the distribution front over the past year, with small format studio stores (total count at > 1,700) adding to regular full format stores domestically and the Make It Yours (MYI) app being a first of its kind digital initiative that is witnessing good customer response.

Awards

2015: Emerging Company of the year - The Economic Times 

2015: Best Company of the year - Business Standard Annual Awards 

2015:  Next Gen. Entrepreneur - Forbes India Leadership award ( to Siddartha Lal CEO of Eicher Motors)

2017: CEO of the year - Business Standard (to Siddartha Lal CEO of Eicher Motors)

Eicher Motors Stock - past 1 year 

Eicher Motors Stock - since 1999

(Disclaimer : This blog id for information purposes only. Stock market investing is a with risk investing including risk on capital invested. Please take a well considered decision)

India - Stack, A set of APIs (Application Programming Interface) One of the best of what India has created.

 WHAT IS INDIA STACK

IndiaStack is a set of APIs (Application Programming Interfaces) that allows governments, businesses, startups and developers to utilise an unique digital Infrastructure to solve India’s hard problems towards presence-less, paperless, and cashless service delivery. 

Its founded on core principles that services can be 

1. Presenceless = capable of being authenticated from anywhere
2. Paperless = reliant on digital records
3. Cashless = truly universalising the access and usage of digital payments 
4. Consent based = allowing secure movement of data authenticated by its owners.

THE EVOLUTION OF INDIA STACK 

1. 2009 - UIDAI was created with objective to issue Unique Identification Numbers named as "Aadhaar"
2. 2010 UIDAI launched Aadhar Authentication API before the first Aadhaar was issued 
3. 2011 NPCI launched Aadhar Payments Bridge and Aadhaar Enabled Payments System which uses Aadhar Number as a central key for electronically channelizing the Government Benefits and subsidies 
4. 2012 UIDAI launched eKYC which allows business to perform Know Your Customer verification process digitally using Biometric or Mobile OTP
5. 2015 CCA launches eSign as an open API to facilitate an Aadhar holder to digitally sign a document and MeitY launches Digital Locker, a platform for issuance and verification of documents and certificates in a digital way, thus eliminating the use of physical documents 
6. 2016 NPCI launches Unified Payments Interface, the most advanced payments system in the world to revolutionise digital payments in India 
7. 2016 NeGD launches Digital Locker a platform for issuance and verification of documents and certificates in a digital way. 

(Source : The India Fintech Report 2020)

The Very Different Approach 

India has chosen to have a very different approach to open banking. Unlike many other geographies where instant payment initiatives are running parallel to open data initiatives, India flipped the equation by implicitly launching open banking payments first on what is now widely considered the best real-time payment network in the world. 

Based on the success of IndiaStack, over 20 countries have shown interest in studying and implementing a digital identity system inspired by Aadhar and the software stack built around it. 

In 2018 Singapore and India had signed a high level agreement to internationalise the IndiaStack which resulted in creation of a joint working group on Fintech to develop API based platforms in ASEAN region. 

A number of countries and international agencies such as the World Bank and Gates Foundation  have also approached India with help to build digital identity. 

 Visit the website of IndiaStack here

(Disclaimer : This blog is for educational purposes only. Please read further disclaimers at the bottom of this webpage)

Hero Motors - worlds largest 2 wheeler maker in terms of no of units sold for last 19 years

Hero MotorCorp

Hero MotoCorp is India's leading two wheeler company, which has been providing customers with an excellent range of two wheelers that ensure both style and comfort. 

The story of Hero MotoCorp can be traced back to the vision of a mobile and empowered India, powered by its two wheelers. Today, Hero MotoCorp has made it its mission to become the best two wheeler company, not only in India but globally by setting benchmarks in style, performance and technology.

Manufacturing Facilities 

Hero MotoCorp has eight globally benchmarked manufacturing facilities, 

• including six in India (Dharuhera, Chittoor, Gurugram, Haridwar, Neemrana, Gujarat) and
•  one each in Colombia and Bangladesh. 

World's Largest Two Wheeler Company

In 2001, the company achieved the most sought-after recognition of being the largest and best bike manufacturer in India and also the 'World No.1' two-wheeler company in terms of unit volume sales in a calendar year. 

Hero MotoCorp Ltd. continues to maintain this position till date.

Milestones 

• 1983 - Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed Shareholders Agreement signed.
• 1984 - Hero Honda Motors Ltd. incorporated.
• 1987 - 100,000th motorcycle produced.
• 1994 - 1,000,000th motorcycle produced.
• 2000 - 4,000,000th motorcycle produced, Splendor declared largest selling single 2 wheeler model.
• 2004 - Total sales crossed a record of 10 million motorcycles. 

• 2006 - 15 million production milestone achieved.
• 2011 - 5 million cumulative sales in a single year. 
• 2013 - 50 Million cumulative 2 wheelers production achieved.
• 2017 - 7 million cumulative slaes in a single year achieved. 
• 2019 - Hero MotoSports Wins The Pan Africa Rally 2019 At Merzouga.

Hero MotorCorp Share - Past 1 year 

Hero MotorCorp Share - Past 5 years 

Hero MotorCorp Share - Since 1999

(Disclaimer : This blog is for information purposes only. Equity market investing is a with risk investing, including risk on capital invested. Please take a well considered decision.)

Risk and the emotional roller coaster of investing. Why Risk is behavioural also.

Risk particularly in finance and investment is often framed in cold and calculating terms, but such an approach can lead us to neglect its very human features.

More often than simply "an absence of certainty" risk is about our inability to deal with probabilities ( of gain and loss as markets go up and down) in a consistent and coherent fashion. 

This causes discomfort.

How we experience and perceive risk is uniquely personal but at the same time certain trends are obvious. 

4 common biases tend to exist among investors 

1. Overconfidence 
2. Reducing Regret 
3. Limited Attention Span; 
4. Chasing Trends 

If you see yourself in any of these biases then the best way to avoid pitfalls of human emotion is to identify the emotion. 

You cannot avoid all behavioural bias but you can minimize the effect. 

"Be fearful when others are greedy and greedy when others are fearful". Warren Buffet. 

Easier said than done - but then that's why execution is the key. 

Many authors have written on psychological or behavioral traps that lead people in the wrong direction with their lives in general.

Quite frequently, some classic forms of dysfunctional psychology are directly evident in investing behavior.

#1. Anchoring Trap 

This refers to an over-reliance on what one originally thinks. 

Imagine betting on a boxing match and choosing the fighter purely by who has thrown the most punches in their last five fights. You may come out all right by picking the statistically more-active fighter, but the fighter with the least punches may have won five bouts by first-round knockouts. Clearly, any metric can become meaningless when it is taken out of context.

In order to avoid this trap, you need to remain flexible in your thinking and open to new sources of information, while understanding the reality that any company can be here today and gone tomorrow. Any manager can disappear too, for that matter.

#2. Sunk Cost Trap 

The sunk cost trap is just as dangerous. This is about psychologically (but not in reality) protecting your previous choices or decisions — which is often disastrous for your investments. It is truly hard to take a loss and/or accept that you made the wrong choices or allowed someone else to make them for you. But if your investment is no good, or sinking fast, the sooner you get out of it and into something more promising, the better.

#3. Confirmation Trap  

Similarly, in the confirmation trap, people often seek out others who have made and are still making, the same mistake. If you find yourself saying something like, "Our stocks have dropped by 30 percent, but it’s surely best just to hang onto them, isn’t it?" then you are seeking confirmation from some other unfortunate investor in the same situation. You can comfort each other in the short run, but it’s just self-delusion. 

#4. Blindness Trap 

Situational blindness can exacerbate the situation. Even people who are not specifically seeking confirmation often just shut out the prevailing market realities in order to do nothing and postpone the evil day when the losses just have to be confronted.

#5. Relativity Trap  

The relativity trap is also there waiting to lead you astray. Everyone has a different psychological make-up, combined with a unique set of circumstances extending to work, family, career prospects and likely inheritances. This means that although you need to be aware of what others are doing and saying, their situation and views are not necessarily relevant outside their own context.

Be aware, but beware too! You must invest for yourself and only in your own context. Your friends may have both the money and the risk-friendliness to speculate in pork belly futures (as in the movie "Trading Places"), but if you are a modest earning and nervy person, this is not for you.

#6. Irrational Exuberance Trap 

When investors start believing that the past equals the future, they are acting as if there is no uncertainty in the market. Unfortunately, uncertainty never vanishes.

There will always be ups and downs, overheated stocks, bubbles, mini-bubbles, industry-wide losses, panic selling in Asia and other unexpected events in the market. Believing that the past predicts the future is a sign of overconfidence. The investors who get hit the hardest — the ones who are still all-in just before the correction — are the overconfident ones who are sure that the bull run will last forever. Trusting that a bull won't turn on you is a sure way to get yourself gored. 

#7. Pseudo-Certainty Trap 

This phrase is an observation of investors' perceptions of risk. Investors will limit their risk exposure if they think their portfolio/investing returns will be positive – essentially protecting the lead – but they will seek more and more risk if it looks like they are heading for a loss.

Basically, investors avoid risk when their portfolios are performing well and could bear more, and they seek risk when their portfolios are floundering and don't need more exposure to possible losses. This is largely due to the mentality of winning it all back. Investors are willing to raise the stakes to "reclaim" capital, but not to create more capital. How long would a race car driver survive if he only used his brakes when he had the lead?

#8. Superiority Trap 

For some people, the superiority trap is extremely dangerous. A lot of investors think they know better than the experts or even the market. Just being well-educated and/or clever does not mean you wouldn't benefit from good, independent advice. Also, it doesn't mean you can outwit the pros and a complex system of markets either. Many investors have lost fortunes by being convinced that they were better than the rest. Furthermore, these people are easy prey for some of the other traps mentioned above.

The Bottom Line  

Human psychology is a dangerous thing, and there are some alarmingly standard mistakes that people make again and again. It is very easy in the heat of the moment, or when subject to stress or temptation, to fall into one of these mind traps. The wrong perceptions, self-delusion, frantically trying to avoid realizing losses, desperately seeking the comfort of other victims, shutting out reality and more can all cost you dearly.

Be aware of the nature of these traps and always be honest and realistic with yourself. Furthermore, seek advice from competent and knowledgeable people of integrity who will bring you back to reality before it is too late. 

DISCLAIMER :  THIS BLOG IS FOR INFORMATION AND NOT TO SOLICIT ANY BUSINESS. PAST PERFORMANCE IS NOT AN INDICATION OF THE PERFORMANCE OF STOCK IN FUTURE. EQUITY STOCK INVESTING IS A WITH RISK INVESTING INCLUDING RISK ON CAPITAL INVESTED. PLEASE TAKE AN INFORMED DECISION BEFORE INVESTING IN A EQUITY STOCK

How to shortlist stocks for investing - Steps and approach

 “Long ago, Ben Graham taught me that ‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” -
Warren Buffett

A brief note on the Steps we use to select a stock to invest into in the Indian Stock Market 

1.Management of the company 

1. Efficiency and consistency of management (longevity as well..)
2. Strategy and goals of the company.
3. Execution Potential and consistency of execution. 
4. Insider buying and buybacks ( we do not like this) 
5. Perks and Compensation to Staff and Workers '
6. Transparency 

2. Fundamentals of the company.

1. Earnings per share (EPS)
2. Price to Earnings Ratio (p/e)
3. Price to Book Ratio (p/b)
4. Debt to Equity Ratio
5. Return on Equity 
6. Price to Sales 
7. Current Ratio
8. Dividend Track Record 
9. Sales growth and Operating Profit Margin

3. Do we understand the products and services offered by the company.  What we do not understand we do not buy?

4.Will people still be using the products and services of this company 10-15 years from now. (at least 5 years !)

5. Does the company have a low cost competitive durable advantage?

6. Does the Company have a MOAT

1. MOAT in stock market investing is a term coined by Warren Buffet.
2.  A moat is a deep, wide ditch surrounding a castle, fort, or town, typically filled with water and intended as a defense against attack. Some stocks have a similar moat around them. That’s why it’s really tough for its competitors to defeat them in its sector.

7.What  is the company doing that its competitors are not?

A portfolio based on these parameters does not necessarily track the stock market indices - but provides an equity investing portfolio which is consistent on returns and offers a lower risk within the equity asset class.  

On a risk return perspective it is certainly a theme in which your monies should be invested to start with.  Risk can then be further increased if returns are favorable. 

DISCLAIMER :  THIS BLOG IS FOR INFORMATION AND NOT TO SOLICIT ANY BUSINESS. PAST PERFORMANCE IS NOT AN INDICATION OF THE PERFORMANCE OF STOCK IN FUTURE. EQUITY STOCK INVESTING IS A WITH RISK INVESTING INCLUDING RISK ON CAPITAL INVESTED. PLEASE TAKE AN INFORMED DECISION BEFORE INVESTING IN A EQUITY STOCK.