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Fundamental Analysis of Suzlon #StockScoreCard

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IntroductionSuzlon Energy  is a wind turbine supplier based in Pune, India. Formerly ranked by MAKE as the world's fifth largest wind turbine supplier, it has since dropped out of the Global top ten rankings (as of 2014) due to extensive losses and inability to repay debts.





Interesting FactsSuzlon operates in over 18 countries and 6 continents!Has over 17,000 MW capacity worldwide.Price of the share has fallen 97%  from its peak since 2008
Fundamental Analysis1. Growth StorySuzlon has been struggling over the past many years to maintain consistent revenues and profits.

Recent changes in the governance policy has damaged the company's scope for making decent profits. Government of India has decided to proceed with auction regime, which has led to extreme competitiveness among companies and thus losing the pricing power!

Lately, Solar energy has proven that clean energy need not be expensive by beating existing non-renewable energy prices by huge margins! Thus Solar energy companies…

Fundamental Analysis of Vakrangee #StockScoreCard

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IntroductionVakrangee is a technology driven company, focusing on creating India's largest network of last-mile retail points-of-sale, to potentially enable every Indian to seamlessly benefit from financial inclusion, social inclusion, Digital India, Skill Development, Employment, Government programmes and a wider access to basic goods and services.





Interesting FactsAt the core, vakrangee is a very asset-light franchise based model44,000 Vakrangee Kendras (Franchise) across 17 states in IndiaWorld's Third Largest Franchise Network. (1st is "7-Eleven Stores", 2nd is "McDonalds")They need very little capital to grow / expand in coming yearsZERO Debt Company!Strong positive cashflow
Fundamental Analysis
1. Growth StoryVakrangee has an amazing growth story
Sales has grown 158% in last five years (from 1500 cr. in Mar'13 to 4000 cr. in Mar'17)Net profit has grown 409% in last five years (from 104 cr. in Mar'13 to 530 cr. in Mar'17)EPS has grown 87% i…

Introducing #StockScoreCard

Introducing Stock Score Card!
At Money Can Work, we always strive to educate our users with the best possible content to help you grow your money.

We are introducing a new Blog Series called #StockScoreCard, where we will try to share the fundamental analysis of an individual stock based on the five multibagger magic mantras which we earlier discussed in this blog.

Five Multi-bagger Magic Mantras:
Growth Story (link)Shareholding Pattern (link)Debts (link)Return on Equity (link)Valuation (link)

Hopefully, #StockScoreCard helps you decide either to Buy/Sell a particular stock.
Please share your feedback, insights and suggestions at our facebook/twitter page.

Check out our first #StockScoreCard - Vakrangee (link)!

Stay tuned!

Valuations - #5 Multibagger Magic Mantra

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You should never buy every single great stock!!!
Yes, you heard it right!
Don't ever buy a company's only because it is a great business!
Just like you shouldn’t buy the next best phone from Apple or Google if it costs a Million.
Even if you can afford to buy, you would be a fool to buy at that price!
Luckily, every day stock prices vary and you just have to wait for the right price which you think is right and then hit “BUY”!

Price is something everyone knows, but what is it really worth?
There is a magic trick to find just that!

In fact, all-time-greatest investor Warren Buffett first looks at the business, comes up with a price in his mind and then looks at today's market price of that stock!

Sounds crazy, but the technique is very simple and anyone can apply it.
Guess the price of Non-Banking Stocks: Compute the sum of last 4 quarter's consolidated EPSMultiply with a P/E multiple which you think is appropriate based on the business and the industry segment it is in.Result is …

Return on Equity #4 Multibagger Magic Mantra

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It is always good to see companies showing BIG profits!
But, how much profit is good profit?

Company A might do 10 crores of profit
Company B might do 100 crores of profit

This doesn’t always mean Company B is better than Company A
More profits does not always mean a better company!
Instead of looking at it in just absolute terms, what is more important is to look at in relative terms
i.e., for every 100 rupee of shareholder's investment what is the profit that the company is making!

Example:
Let's say Company A and B reports net profit of INR 500 crores.

In absolute terms, both companies are equal in terms of profitability.

But in relative terms,
Company A could be making 30 INR profits for every 100 INR investor’s equity.
Company B could be making just 10 INR profits per 100 INR of equity.

Return on Equity (RoE) of Company A is 30% but Company B is 10%.

Hence, Company A is a better pick than Company B

Return on Equity is a key metric in identifying a multibagger stock; RoE reveals the abili…

Debts, Loans and Mallya #3 Multibagger Magic Mantra

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Debts (loans) are sometimes necessary to run a business, to acquire companies and for manufacturing capacity expansion.

But, very high debts can literally kill a company!

It is better to go to bed hungry, than to wake up in debt!

Think about this, would you invest if Vijay Mallya started a new venture? Lol 😂

Stay away from companies whose debt/equity ratio is more than 1
In fact, I personally wouldn’t invest if debt/equity ratio is more than 0.5


Let's take an example of a company with good debt/equity Ratio: Maruti Suzuki (link)




Now, let's take a bad example: Idea Cellular (link)





Worst Case ScenarioThere are few companies with negative debt/equity ratios, like Suzlon (link).
Stay away from such companies too!
Negative debt/equity ratio means the company's net worth is negative.
Very few bankers extend loans to such a company with a negative net worth unless there are extenuating circumstances, and there are assets that the company can pledge.







To summarize, while picking a multibagge…

Shareholding Patterns - #2 Multibagger Magic Mantra

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Shareholding pattern in simple words explains how much of the company's ownership is held by the promoters (Owners of the company) and how much is held by the public shareholders.

Imagine a company where promoters (Owners) themselves are selling out their own stocks!


This is a BIG red signal!
How can outside people be confident about the stock’s future if the promoters themselves are exiting the stock!

On the other hand, if promoters are super-confident of the company’s future revenue and profits growth they themselves will buy more stakes from the open market. They are betting their own money on the company's growth! Imagine how confident they would be about the potential ahead of them!


This is a BIG green Signal!
A quick check can help you understand the shareholding patterns and make a decision.

Here is a good shareholding pattern of a company - Maruti Suzuki (link)





Here are the shares pledged (that can be sold by promoters anytime) of Maruti Suzuki (link)



Here is a bad shareholding…