* It is essential to monitor your equity instruments and churn your portfolio, as the markets are dynamic.
* Portfolio churn involves periodically reviewing valuations.
* Use wealth or portfolio trackers to maintain your portfolio.
* Peruse the company's annual report's key components - balance sheet, profit and loss account and the cash flow statement - for your analysis.
* Be aware of what is happening in the financial markets by reading newspapers or watching financial news TV channels.
* If you analyze the segmental revenue break up, in the case of multidivisional companies, it will give you
insights into which segments are driving growth for the company.
* Net profit growth is the real indicator of growth.
* The operating profit, or EBIT (Earnings Before Interest and Taxes), depicts the true strength of the company's business model.
* ROCE indicates how efficiently the company utilizes its capital.
* Companies with high P/Es are perceived as riskier because shareholders have high performance
expectations. However, this ratio cannot be viewed in isolation.
* The debt-equity (D/E) ratio shows how a company is financing its activities. If higher than 1:1, then the
company is using a larger proportion of borrowed funds to run its business, which could be risky.
* Price to Sales ratio is used to value a stock compared to its peers or its own historic performance. You should use trailing 12 months' net sales for calculating this ratio.
* Beta is a financial, statistical tool used to measure volatility of a stock in comparison to a benchmark index
(say ASPI). There is no ideal level of beta, since it depends on your risk appetite.
Edited Article from Kotak Securities