Value Investing in Financial Terms

1. Value Investing

2. WHAT ISVALUE….?
• The monetary worth of an asset , business entity , good sold , service
rendered , or liability or obligation acquired.

3. WHAT IS INVESTING….?
• Put money into financial schemes, shares, property, or a commercial
venture with the expectation of achieving a profit.

4. Share Royal Enfield
On 3rd Jan 2011 :– 1252.75 /- 1,33,000/-
On 3rd Jan 2012 :- 1495.7/- 1,13,050/-
On 3rd Jan 2013 :- 2857.2/- 1,06,000/-
On 3rd Jan 2016 :- 17,365.27/- 66,500/-
EICHER MOTORS

5. ― Mr. X Purchase share of company XYZ ltd. at price 315/- Rs.
― Mr.Y Purchase Share of CompanyABC ltd. At Price of 500/- Rs.
Which is a better value?

6. WHAT ISVALUE INVESTING?
The strategy of selecting stocks that trade for less than their
intrinsic values

7. Investing
Speculating
Investing in stocks means only buying shares
when you have a thorough understanding of the
underlying business fundamentals of the
company, as well as a sound basis for
determining that stock’s value.
Speculating is buying stocks without
this knowledge.

8. FEWTERMS FOR INVESTORS AWARENESS….
• INTRINSICVALUE : -
It is an estimation of stock value.The intrinsic value may be lesser or higher
than stock market value.
• MARKET PRICE : -
It is the price of a stock is trading at any given time in the stock market.

9. INTRINSICVALUE = D1/ K-G
where,
D1 = Dividend for next year
K = Rate of Return
G = Growth

10. PRINCIPLES
OF
VALUE INVESTING
ANALYSIS MARGIN OF SAFETY ADEQUATE
RETURN

11. ANALYSIS
• Stocks are not merely pieces of paper or electronic quotations on a
computer screen, but partial ownership interests in real businesses.
• Therefore, you must thoroughly analyse the underlying business and its
prospects before purchasing a stock
For Example….
Economy of the Country
Industry Analysis
CompanyAnalysis – Ratio Analysis

12. MARGIN OF SAFETY
• Two Rules while investing money.
Rule 1 :
• Don't Lose Money
Rule 2 :
• Don't Forget Rule 1

14. ADEQUATE RETURN
• There Should be a return on investment…

15. CharacteristicsofValueStocks
Out of favour with the market
Share price has been weak or has underperformed
Problems are temporary or fixable
The underlying business is well placed
Demonstrating attractive value criteria
Changing management

16. CharacteristicsofValueInvestors
Disciplined
Patient
Contrarian
Courageous
Thorough
Focused
Self belief
Conservative
Conservative

17. MISCONCEPTIONS ABOUTVALUE INVESTING
• Value Investing is a myth
• No consideration is given to growth
• No emphasis is given to quality
• Stocks must have low PERs
• Great businesses are never good value
• Value investing is cigar butt investing

18. SHORTCOMINGS OFVALUE INVESTING
• Value traps
• Buying too early
• Selling too early
• Underperforming for long periods

19. EXAMPLE OF GOODVALUE INVESTING….
Particulars Company X CompanyY
Dividend Rs . 10/- share Rs. 1.80/- share
Growth 25% 8%
Rate of Return 30% 10%
MarketValue 260 60
Below are two Automobile companies…

20. Company X CompanyY
No New upcoming vehicle Two new up-coming vehicle
Share price stable since last 45 days Share price is slowly and steadily increasing
There are no upgrade in current vehicles.
Re-launching current vehicle by upgrading
features.

21. THANK YOU…..