Investing Basics - Feel free to ask the most basic questions

Also note that what Invits payout is partly Interest & partly Return of Capital - i.e. they return a bit of your principal with every payment - so at some point, the Invit will come to zero value & you then won’t get anything from then on.

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That’s not how it works.
Firstly, it is not necessary that capital will be returned along with interest. Secondly, even if capital is returned, it isn’t that it will go to zero and hence you won’t be entitled to anything anymore.
I am talking about Indigrid which has perpetual assets.

Read page 22 - https://www.indigrid.co.in/pdf/investors/results-reports/2018-19/financial-results/IndiaGrid-Concall-transcript-final.pdf

There is a potential for it perpetual but it’s not guaranteed to be.

Also the NAV of the Invit keeps going down (irrespective of the Market price of the Invit) - the NAV goes down because they consider it non-perpetual.

@KunalKothari @VijayShetty - Hey Vijay and Kunal…Thanks for the inputs guys. Could you pls. point me to a url where i could find the dividend paid in the past and how much the NAV has fluctuated in past 1-2 years…Thanks again!

There is info in the article which is wrong (at least wrt IRB Invit).

I own IRB Invit. They don’t give any dividend. What they give is interest + Return of Capital. In interest part is taxed just like regular bank interest. They even do TDS on interest. The ROC is tax free.

I wouldn’t know, I did not invest in either of them, just wanted to share. Things may have changed since its posting, I don’t know. So what has been your experience?

During researchiing a company named Gulshan Poly found an interesting thing,
Company’ interest part rose significantly in March qtr and yoy even though its debt is reduced…how to look at it? What could be the reason?

If a loan is taken during the quarter and paid off before the end of the quarter, it will not appear on the Balance sheet, but the interest cost will be incurred.

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Hi,
Can anyone explain me the delivered quantity vs traded quantity?
It’s a notion that typically in scrupulous companies the trading is lot higher than delivered quantities. Is this true in all the cases?
How to interpret a counter which is seeing higher trading volume. In this case It has been observed in SHILPA MEDICARE.
Please explain.

Hello All,

I need to understand basics of how book value of a bank increases. I understand that it is total asset value. I am following equitas small finance bank. The results for last one year have been good with around 35% increase at all levels still the book value remains around 70 without any increase in 1 year. How is that possible?

True…i m a new member n feeling the same.i thought to share something just to start a new topic but the message was immediately red flagged When i asked for reasons so that i cudb more careful in future the moderator not still now the explanation to red flag is not quick as the red flag.The moderator just reffered to community in guidelines n it seems auto generated.This definitely demotivates future posting

Where are you getting the data from?

The problem is that the forum has over 30,000 active users and only 4 part-time moderators. The entire onus on keeping the forum standards high is done by the users. And flagging unwanted, irrelevant, bad or unclear posts is an important activity.

Starting a new topic is a very important activity and the guidelines have been created so that only important and non-repeating threads are created.

The idea is not to demotivate anyone. Just to put in more effort when creating a thread.

Please help in keeping this the best online forum for investors.

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As someone who flags a number of posts every week, the one advice I will give to new members is to spend 10 minutes of your time to read the FAQs section: FAQ - ValuePickr Forum

The link is always pinned at the top of the homepage.

ValuePickr is what it is today because of these guidelines, which for the lack of better phrasing, “cut the crap” and leave behind only constructive and value additive discussion. Throwing caution to the wind will only dilute the brand of VP has among the investors’ community. I hope new members understand this.

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I was reading about Deferred Taxes here - http://faculty.uml.edu/ccarter/Chapter11Part5.htm

Is this allowed in India also - calculating a different profit in your P&L Statement & and your tax returns. If yes, why is this allowed at all anywhere in the world? Isn’t this basically showing a different picture in your P&L statement that what is actually true?

Try a Bajaj finance FD. Highest interest rate, renewal also increases the interest rate and if you already are a customer, then you’ll get another hike in interest rate.

You will reach your 45000 goal

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@hitesh2710, @basumallick @phreakv6 @bheeshma, @Yogesh_s, @all VPR investors

Can you throw some light on how you guys track so many companies? I used to read about so many companies but it gets impossible for me to monitor each of them every quarter and I finally leave altogether.

Do you guys make an excel or notes of each company (Say 100 companies) and review them every quarter. Please share your experience and approach. I badly need some suggestions here.

Circle of Competence

The most effective filter is Circle of Competence. If you honestly admit to yourself that you understand that company’s business and financial statements to a good level, then it’s reasonable to track it. But I have personally seen that this eliminates a LOT of companies, because I don’t understand too many industries that well.

Financials Sanity Checks

The second-level filter is an overall sanity checks on the financial statements. In no particular order, I usually look at the following:

  1. Consistent Operating Cash Flow generation capability (Indicates operational efficiency)
  2. RoCE / RoE / RoIC at or above industry average (Indicates Moat)
  3. Consistency/Increase in Margins (Indicates bargaining power)
  4. Consistency in Cash Conversion Cycle (Indicates good Working Capital management)
  5. Growth in Revenues above GDP Growth + Inflation (So, right now around 10-11%)
  6. Low Debt
  7. High Promoter Holding
  8. Low Pledge
  9. Low ‘Other Income’ as a Percentage of Profits
  10. Credit Rating History

Obviously there are no hard and fast rules. You can let some of these slip by on a case-by-case basis.

Basic Forensic Checks

The final filter would be basic forensic checks for in the company’s history for frauds, SEBI violations, Tax violations, Related Party Transactions, Piggybacking Private companies (Tofler helps) and so on.

These are the most important checks. This should eliminate 90% of the companies you are interested in. The final check would be a Valuation check. I personally do a DCF, but any method would do I guess. But this usually comes after a lot of research about the company and its business. Finally though, if I see that the Value is way below CMP, I remove it from my active watchlist, but keep it in the back of my mind, just in case it somehow gets to my expected purchase price.

As I write this, I have only about 8 stocks in my PF and around 5-6 in my watchlist. I don’t care about the rest of the investing universe at this point, because they have been eliminated one way or the other using the above steps. If I tracked 100 companies, I would go mad.

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I use Microsoft OneNote extensively. However, the tool is not important. You can do it using word or google docs as well. The main idea is to write short notes (summaries) of each company you are studying. Cover the basics like what it does, what are the main sources of revenue, what is it doing differently than others (if anything), why you like the company and risks you can think of. Then every quarter you can add a short note to the document based on the result so that you are able to see how things are changing over time.

Also, try to cluster companies together in an industry. For example, if you are saying going through auto stocks, then try to read up maruti, tata motors, hero motors, eicher, TVS etc. This will also help in a much deeper understanding of the overall industry dynamics.

Like in everything start small else it will become overwhelming. Pick 1/2 industries you like and have some knowledge on and follow this approach. then expand it after a few quarters.

If you do this consistently over time, you can follow a fair number of companies.

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