This document discusses Warren Buffett's investment philosophy and approach to evaluating potential investments. It provides background on Buffett and outlines 14 questions he considers when determining the attractiveness of a business as an investment. These questions examine factors like competitive advantage, capital allocation, earnings growth, profitability, financial strength, and ability to reinvest profits at high rates of return. The document then uses Indian company CRISIL as a case study, answering the 14 questions as applied to CRISIL to determine if it would meet Buffett's criteria as an attractive investment. Projected returns on CRISIL are also calculated using both historical earnings growth and sustainable growth models.
Bangalore stock exchange session july 2015Raja Sekharan
Presentation in Bangalore Stock exchange on 26th July 2015 on - "Investing under current market conditions".
I share my views on Definition of Rich and how to select Mutual funds and Stocks in Indian markets and when to exit an investment.
Mutual funds are professionally managed investment funds that pool money from many investors to purchase securities like stocks, bonds, and money market instruments. The fund is overseen by a fund manager who buys and sells assets according to the fund's investment objective. Investors share in the income and capital gains of the fund proportionate to their investment. Mutual funds offer diversification, affordability, and professional management for individual investors. Some disadvantages include lack of a tailored portfolio and potential underperformance. Mutual funds are regulated in India by SEBI and operate through a trust structure with sponsors, trustees, asset management companies, and third party administrators.
How SPY investing works is just like buying individual stocks except that you are investing in the 500 largest publicly traded US companies.
https://youtu.be/aJt5YIf0Gto
Tribhovandas Bhimji Zaveri (TBZ), a 148-year old Mumbai-based jewellery retailer, conducted an initial public offering to raise Rs. 200 crore. TBZ planned to use the funds to open new showrooms, expand manufacturing facilities, and meet working capital needs. While TBZ has a strong brand name and focus on customer needs, it also faces challenges including inventory risk, competition from other jewellery chains, and potential impact of gold price fluctuations. The IPO received a moderate response due to TBZ's high valuation compared to peers, plans to use most funds for working capital, and pressure on profitability from expansion.
The Indian markets had a flat December with a brief correction in the middle of the month. The letter outlines reasons for the fund manager's bullish long-term outlook on Indian markets, including a cyclical economic recovery aided by lower inflation and commodity prices. Several structural factors are also cited such as capital inflows due to low global growth, India embracing capitalism, and monetary reforms. The fund manager believes the market correction provides opportunities to accumulate quality stocks at attractive valuations. The letter concludes with investment quotes emphasizing valuation, patience, and focusing on companies with potential for outsized returns.
The document discusses four approaches to picking stocks that can deliver multibagger returns over the long run. The first approach is to buy stocks with low price-to-earnings ratios. An analysis showed that stocks with P/E ratios below 10x in 2000 generated significantly higher returns over the following 10 years compared to stocks with higher P/Es. The second approach is to buy stocks with low price-to-book value ratios, as these also tend to deliver higher long-term returns. The document provides some lists of currently undervalued stocks based on these criteria and urges further analysis before investing.
Bangalore stock exchange session july 2015Raja Sekharan
Presentation in Bangalore Stock exchange on 26th July 2015 on - "Investing under current market conditions".
I share my views on Definition of Rich and how to select Mutual funds and Stocks in Indian markets and when to exit an investment.
Mutual funds are professionally managed investment funds that pool money from many investors to purchase securities like stocks, bonds, and money market instruments. The fund is overseen by a fund manager who buys and sells assets according to the fund's investment objective. Investors share in the income and capital gains of the fund proportionate to their investment. Mutual funds offer diversification, affordability, and professional management for individual investors. Some disadvantages include lack of a tailored portfolio and potential underperformance. Mutual funds are regulated in India by SEBI and operate through a trust structure with sponsors, trustees, asset management companies, and third party administrators.
How SPY investing works is just like buying individual stocks except that you are investing in the 500 largest publicly traded US companies.
https://youtu.be/aJt5YIf0Gto
Tribhovandas Bhimji Zaveri (TBZ), a 148-year old Mumbai-based jewellery retailer, conducted an initial public offering to raise Rs. 200 crore. TBZ planned to use the funds to open new showrooms, expand manufacturing facilities, and meet working capital needs. While TBZ has a strong brand name and focus on customer needs, it also faces challenges including inventory risk, competition from other jewellery chains, and potential impact of gold price fluctuations. The IPO received a moderate response due to TBZ's high valuation compared to peers, plans to use most funds for working capital, and pressure on profitability from expansion.
The Indian markets had a flat December with a brief correction in the middle of the month. The letter outlines reasons for the fund manager's bullish long-term outlook on Indian markets, including a cyclical economic recovery aided by lower inflation and commodity prices. Several structural factors are also cited such as capital inflows due to low global growth, India embracing capitalism, and monetary reforms. The fund manager believes the market correction provides opportunities to accumulate quality stocks at attractive valuations. The letter concludes with investment quotes emphasizing valuation, patience, and focusing on companies with potential for outsized returns.
The document discusses four approaches to picking stocks that can deliver multibagger returns over the long run. The first approach is to buy stocks with low price-to-earnings ratios. An analysis showed that stocks with P/E ratios below 10x in 2000 generated significantly higher returns over the following 10 years compared to stocks with higher P/Es. The second approach is to buy stocks with low price-to-book value ratios, as these also tend to deliver higher long-term returns. The document provides some lists of currently undervalued stocks based on these criteria and urges further analysis before investing.
This document provides an overview of a wealth management course. It introduces financial planning and wealth management concepts. Key points covered include defining assets and liabilities, steps to become financially independent by ensuring returns from assets exceed monthly expenses, and creating a cash flow plan for a hypothetical couple to plan their finances over 50 years. Various investment options are also listed. The document concludes by assigning teams to present on major stock exchanges.
The document provides background on Warren Buffett, Berkshire Hathaway, and GEICO. It discusses how Buffett was influenced by Benjamin Graham's teachings in value investing. It describes how Berkshire Hathaway struggled as a textile company but used cash flows to acquire insurance companies. It also summarizes Buffett's history of acquiring stakes in GEICO starting in 1976 and how Lou Simpson helped turn it around. The case study will analyze if acquiring the remaining GEICO shares served Berkshire's goals and if the bid price was appropriate given Buffett's value investing approach.
Warren Buffett is the second richest person in the world with a net worth of $62 billion in 2009. He is the Chairman and CEO of Berkshire Hathaway Inc., the largest holding company in the world. Berkshire Hathaway was originally a textile company but has grown to include insurance, apparel, building products, finance, utilities and energy businesses. Buffett's investment philosophy focuses on assessing the intrinsic value of a business based on future cash flows rather than accounting profits, only investing in businesses that have favorable risk/reward profiles, and ensuring managers' and shareholders' interests are properly aligned.
The document provides information on two IPOs: Quess Corp and Quick Heal.
Quess Corp's IPO in June-July was oversubscribed 143.99 times and saw the stock price rise 53.75% since listing. The funds raised were intended to repay debt, fund capital expenditures, and acquisitions. Quick Heal's IPO in February was oversubscribed 8 times but the stock price has fallen 18.29% since. The proceeds were slated for advertising, R&D infrastructure, and general corporate purposes. Key metrics like P/E ratios and industry growth rates are provided to help analyze where to invest between the two IPOs.
This document discusses approaches for valuing startups. It begins with an overview of trends in Indian startup investments and deals in 2017, noting sectors like fintech received significant funding. It then covers characteristics of startup valuation, noting the lack of revenues, high risks, and speculative projections. The document outlines several "market approach" valuation methods for early-stage companies, including the First Chicago Method, Exit Multiple Method, Reverse Calculation Method, and Scorecard Method. These methods consider factors like expected success rates and required investor returns to determine current startup valuations.
By www.ProfitableInvestingTips.com
What is Intrinsic Stock Value?
In the aftermath of the stock market crash of 1929 in the early days of the Great Depression Benjamin Graham introduced the concept of value investing. No longer would those buying and selling stocks need to act like they were at the casino. With the concepts of intrinsic value and margin of safety Graham taught investors a rational means of investing in stocks. With this in mind just what is intrinsic stock value? And how does this concept help with profitable stock investing?
What Is Intrinsic Stock Value?
The dictionary definition of intrinsic stock value is its fundamental value. It is obtained by adding up predicted future income of a stock and subtracting current price. It can also be seen as actual value of an equity versus its book value or market value. The concept of fundamental analysis of equities evolved from this concept. Using fundamental analysis the intrinsic value of a stock is the expected company cash flow discounted to current dollars. It is a discounted cash flow valuation. An inherent weakness in this concept is that too often the medium and long term prospects of a company and its stock price are not clear. So, what is intrinsic stock value of a company if the future is uncertain? The ability to see into the future to see how well a company will manage its assets, products, costs, R&D, and marketing is of utmost importance in calculating intrinsic stock value as a means of deciding whether or not to purchase a stock.
What is Intrinsic Stock Value as a Formula?
Mr. Graham presented investors with a formula for calculating intrinsic stock value in 1962 and modified it in 1974. The 1974 version considers the following:
• Earnings per share, EPS, for the preceding twelve months
• A constant of 8.5 representing an expected price to earnings ratio, P/E ratio, for a company that is not growing
• An estimate of long term growth, five years = g
• A constant of 4.4 which was the average yield of high grade corporate bonds in the early 1960 decade
• The current yield of AAA corporate bonds = Y
• Where V = intrinsic value
The formula is as follows:
V = (EPS x (8.5 + 2g) x 4.4)/Y
The way the investors were encouraged to use intrinsic value was to derive what is referred to as a Relative Graham Value, RGV. This is to divide the calculated intrinsic value of the stock by its current price. If the result, the RGV, is less than one the stock is overvalued and a bad investment and if the ratio is above one it is undervalued and may be a good investment.
What is Intrinsic Stock Value as an Investing Tool?
There are a couple of difficulties in using the simple calculation above to determine the forward looking earnings of a stock and therefore its intrinsic value. First of all the formula does not account for inflation. Thus one could use the formula and end up with a stock valued higher in dollars but in dollars that are inflated.
This document provides an overview of mutual funds, including what they are, how they work, advantages, types of mutual funds, how to invest in them, and risks. Some key points:
- A mutual fund pools money from investors and invests it in a portfolio of securities like stocks and bonds. It allows investors to own a diversified basket of assets at a relatively low cost.
- There are different types of mutual funds categorized by asset class (equity, debt, hybrid, gold) and market capitalization (large-cap, mid-cap, small-cap, multi-cap).
- Popular ways to invest include lump sums, systematic investment plans (SIPs), and systematic transfer plans (
Critical Analysis of Reasons of IPO failurenitingoswami
Final year project for PGDBM from MS ramaiah Institute Of Management.
It discuss various reasons why IPO fails in Market and various takes of Investors and Rural India on IPO.
Savings and Investment
01. Savings Bank Account
02. Bank Fixed Deposit
03. Company Deposits
04. Bank Recurring Deposit
05. Post Office Recurring Deposit
06. Post Office Term Deposit
07. Public Provident Fund
08. National Savings Certificate
09. Kisan Vikas Patra
10. Sukanya Samriddhi Yojana
11. Senior Citizen Savings Scheme
12. Post Office Monthly Income Scheme
13. RBI Savings Bond
14. Capital Gain Tax Exemption Bond or 54 EC Bonds
15. Rajiv Gandhi Equity Savings Scheme
16. Inflation Indexed Bonds
17. Mutual Funds
18. Stocks and Equity
19. National Pension System
20. Unit Linked Insurance Plans Protection
21. Health Insurance
22. Life Insurance
23. Annuity
Income Tax
24. Income Tax Planning
25. Tax Planning Strategies
City Union Bank (CUB) is recommended as a buy investment, with a core investment thesis that it is a well-run regional bank that has consistently generated healthy returns and shareholder wealth creation. CUB focuses on lending to the MSME segment, which is expected to see strong growth over the next decade as manufacturing and global trade increases in India. CUB has a strong track record over 15 years of delivering high returns through earnings growth, and its focus on MSME lending, strong execution, and conservative culture position it for continued outperformance going forward at its current attractive valuation.
- HBJ Capital is an equity research firm that provides stock recommendations to retail, high net worth, and institutional clients with the goal of identifying "hidden gem" multibagger stocks.
- Their flagship Multibagger Stock Package recommends 12 stocks per year with in-depth research reports and quarterly updates, focusing on mid-cap, small-cap, micro-cap, and other styles that could generate high returns.
- Their research process involves analyzing sectors, companies, management, and financials through primary and secondary research to identify undervalued stocks with strong growth potential.
PPT_disclosure in an IPO offer document_Case StudyShanmukh Dave
The document is a report presented by students of Mumbai Education Trust on critical disclosures in offer documents of IPOs. It includes an analysis of the IPO process, guidelines on disclosures as per SEBI, and case studies of recent IPOs of Bharti Infratel Limited and V Mart Retail Limited. The report evaluates the offer documents of these companies on various parameters like company introduction, risk factors, capital structure, object of issue, and basis of issue price. It points out some inconsistencies in the deployment timelines and store expansion plans of V Mart Retail Limited.
This document describes an offline portfolio management service that aims to build wealth over the long run by investing in a portfolio of selected stocks. The service involves three steps - investors plant by initially investing in the portfolio, the service nurtures the portfolio through research-driven management, and investors eventually harvest their wealth through long-term capital appreciation. Key features include a focus on hidden gem and undervalued stocks, minimal brokerage costs, and updates to subscribers when changes are made to the portfolio.
Mutual funds allow individual investors to pool their money together into a professionally managed investment portfolio. The document discusses the life stages of individual investors from young independence to retirement and how mutual funds can help investors meet their financial goals at each stage. It provides an overview of mutual fund types, including equity, debt, money market, and hybrid funds. The benefits of mutual funds are highlighted such as diversification, low costs, liquidity, and professional management. Risks of equity investing are also discussed. The mutual fund industry in India is summarized from its origins in 1964 to its current size and regulations.
This document provides information on Systematic Investment Plans (SIPs). It defines SIPs as a financial planning tool that helps create wealth by investing small sums regularly over time. SIPs allow investors to invest in mutual funds through smaller periodic investments like monthly installments instead of a large one-time investment. SIPs also help reduce risk through rupee cost averaging and benefit from the power of compounding returns. The document recommends SIPs as a means for investors to participate in market growth while diversifying risk.
The document discusses the capital raising process and initial public offerings (IPOs) in the Indian capital market. It provides details on the IPO process including pricing of shares, allocation of shares, reasons for listing, and requirements for information disclosure. It compares India's IPO process to those of the US and UK, noting that India requires more detailed disclosure and has regulations like mandatory share lockups, grading of IPOs, and disclosure of intended use of funds. Book building is the dominant method used to determine IPO prices in India.
This document provides information on IPO grading in India. IPO grading is done by credit rating agencies registered with SEBI and provides a relative assessment of an IPO's fundamentals on a 5-point scale. Obtaining an IPO grade is now mandatory for companies filing draft offer documents. The grade considers factors like industry prospects, financial position, management quality, and risks. However, the grade does not consider issue price and is not a recommendation on subscribing to the IPO. Investors must also consider risk factors and price disclosed in the prospectus.
The book discusses Warren Buffett's approach to analyzing companies using financial statements. Buffett looks for companies with durable competitive advantages, such as unique products or low costs, that allow high returns on revenue of over 20%. He favors those with consistent earnings, low expenses for research, depreciation and interest, and strong liquidity with little debt. By identifying firms with these characteristics in their financial statements, Buffett has been able to achieve remarkable investment returns over decades.
This document provides an overview of real estate investment options and strategies. It discusses:
1) Why real estate is a good investment option in India due to its low risk of downfall and ability to provide stable rental income. Investments can yield 15% returns annually.
2) How to leverage gains from property investments by taking out loans and benefiting from property appreciation. An example shows 40% ROI over 2 years.
3) Different real estate investment options like residential and commercial properties, land, REITs, and real estate funds and equities. Residential properties typically provide 3% rental returns and 15% capital appreciation annually.
This document provides an overview of a wealth management course. It introduces financial planning and wealth management concepts. Key points covered include defining assets and liabilities, steps to become financially independent by ensuring returns from assets exceed monthly expenses, and creating a cash flow plan for a hypothetical couple to plan their finances over 50 years. Various investment options are also listed. The document concludes by assigning teams to present on major stock exchanges.
The document provides background on Warren Buffett, Berkshire Hathaway, and GEICO. It discusses how Buffett was influenced by Benjamin Graham's teachings in value investing. It describes how Berkshire Hathaway struggled as a textile company but used cash flows to acquire insurance companies. It also summarizes Buffett's history of acquiring stakes in GEICO starting in 1976 and how Lou Simpson helped turn it around. The case study will analyze if acquiring the remaining GEICO shares served Berkshire's goals and if the bid price was appropriate given Buffett's value investing approach.
Warren Buffett is the second richest person in the world with a net worth of $62 billion in 2009. He is the Chairman and CEO of Berkshire Hathaway Inc., the largest holding company in the world. Berkshire Hathaway was originally a textile company but has grown to include insurance, apparel, building products, finance, utilities and energy businesses. Buffett's investment philosophy focuses on assessing the intrinsic value of a business based on future cash flows rather than accounting profits, only investing in businesses that have favorable risk/reward profiles, and ensuring managers' and shareholders' interests are properly aligned.
The document provides information on two IPOs: Quess Corp and Quick Heal.
Quess Corp's IPO in June-July was oversubscribed 143.99 times and saw the stock price rise 53.75% since listing. The funds raised were intended to repay debt, fund capital expenditures, and acquisitions. Quick Heal's IPO in February was oversubscribed 8 times but the stock price has fallen 18.29% since. The proceeds were slated for advertising, R&D infrastructure, and general corporate purposes. Key metrics like P/E ratios and industry growth rates are provided to help analyze where to invest between the two IPOs.
This document discusses approaches for valuing startups. It begins with an overview of trends in Indian startup investments and deals in 2017, noting sectors like fintech received significant funding. It then covers characteristics of startup valuation, noting the lack of revenues, high risks, and speculative projections. The document outlines several "market approach" valuation methods for early-stage companies, including the First Chicago Method, Exit Multiple Method, Reverse Calculation Method, and Scorecard Method. These methods consider factors like expected success rates and required investor returns to determine current startup valuations.
By www.ProfitableInvestingTips.com
What is Intrinsic Stock Value?
In the aftermath of the stock market crash of 1929 in the early days of the Great Depression Benjamin Graham introduced the concept of value investing. No longer would those buying and selling stocks need to act like they were at the casino. With the concepts of intrinsic value and margin of safety Graham taught investors a rational means of investing in stocks. With this in mind just what is intrinsic stock value? And how does this concept help with profitable stock investing?
What Is Intrinsic Stock Value?
The dictionary definition of intrinsic stock value is its fundamental value. It is obtained by adding up predicted future income of a stock and subtracting current price. It can also be seen as actual value of an equity versus its book value or market value. The concept of fundamental analysis of equities evolved from this concept. Using fundamental analysis the intrinsic value of a stock is the expected company cash flow discounted to current dollars. It is a discounted cash flow valuation. An inherent weakness in this concept is that too often the medium and long term prospects of a company and its stock price are not clear. So, what is intrinsic stock value of a company if the future is uncertain? The ability to see into the future to see how well a company will manage its assets, products, costs, R&D, and marketing is of utmost importance in calculating intrinsic stock value as a means of deciding whether or not to purchase a stock.
What is Intrinsic Stock Value as a Formula?
Mr. Graham presented investors with a formula for calculating intrinsic stock value in 1962 and modified it in 1974. The 1974 version considers the following:
• Earnings per share, EPS, for the preceding twelve months
• A constant of 8.5 representing an expected price to earnings ratio, P/E ratio, for a company that is not growing
• An estimate of long term growth, five years = g
• A constant of 4.4 which was the average yield of high grade corporate bonds in the early 1960 decade
• The current yield of AAA corporate bonds = Y
• Where V = intrinsic value
The formula is as follows:
V = (EPS x (8.5 + 2g) x 4.4)/Y
The way the investors were encouraged to use intrinsic value was to derive what is referred to as a Relative Graham Value, RGV. This is to divide the calculated intrinsic value of the stock by its current price. If the result, the RGV, is less than one the stock is overvalued and a bad investment and if the ratio is above one it is undervalued and may be a good investment.
What is Intrinsic Stock Value as an Investing Tool?
There are a couple of difficulties in using the simple calculation above to determine the forward looking earnings of a stock and therefore its intrinsic value. First of all the formula does not account for inflation. Thus one could use the formula and end up with a stock valued higher in dollars but in dollars that are inflated.
This document provides an overview of mutual funds, including what they are, how they work, advantages, types of mutual funds, how to invest in them, and risks. Some key points:
- A mutual fund pools money from investors and invests it in a portfolio of securities like stocks and bonds. It allows investors to own a diversified basket of assets at a relatively low cost.
- There are different types of mutual funds categorized by asset class (equity, debt, hybrid, gold) and market capitalization (large-cap, mid-cap, small-cap, multi-cap).
- Popular ways to invest include lump sums, systematic investment plans (SIPs), and systematic transfer plans (
Critical Analysis of Reasons of IPO failurenitingoswami
Final year project for PGDBM from MS ramaiah Institute Of Management.
It discuss various reasons why IPO fails in Market and various takes of Investors and Rural India on IPO.
Savings and Investment
01. Savings Bank Account
02. Bank Fixed Deposit
03. Company Deposits
04. Bank Recurring Deposit
05. Post Office Recurring Deposit
06. Post Office Term Deposit
07. Public Provident Fund
08. National Savings Certificate
09. Kisan Vikas Patra
10. Sukanya Samriddhi Yojana
11. Senior Citizen Savings Scheme
12. Post Office Monthly Income Scheme
13. RBI Savings Bond
14. Capital Gain Tax Exemption Bond or 54 EC Bonds
15. Rajiv Gandhi Equity Savings Scheme
16. Inflation Indexed Bonds
17. Mutual Funds
18. Stocks and Equity
19. National Pension System
20. Unit Linked Insurance Plans Protection
21. Health Insurance
22. Life Insurance
23. Annuity
Income Tax
24. Income Tax Planning
25. Tax Planning Strategies
City Union Bank (CUB) is recommended as a buy investment, with a core investment thesis that it is a well-run regional bank that has consistently generated healthy returns and shareholder wealth creation. CUB focuses on lending to the MSME segment, which is expected to see strong growth over the next decade as manufacturing and global trade increases in India. CUB has a strong track record over 15 years of delivering high returns through earnings growth, and its focus on MSME lending, strong execution, and conservative culture position it for continued outperformance going forward at its current attractive valuation.
- HBJ Capital is an equity research firm that provides stock recommendations to retail, high net worth, and institutional clients with the goal of identifying "hidden gem" multibagger stocks.
- Their flagship Multibagger Stock Package recommends 12 stocks per year with in-depth research reports and quarterly updates, focusing on mid-cap, small-cap, micro-cap, and other styles that could generate high returns.
- Their research process involves analyzing sectors, companies, management, and financials through primary and secondary research to identify undervalued stocks with strong growth potential.
PPT_disclosure in an IPO offer document_Case StudyShanmukh Dave
The document is a report presented by students of Mumbai Education Trust on critical disclosures in offer documents of IPOs. It includes an analysis of the IPO process, guidelines on disclosures as per SEBI, and case studies of recent IPOs of Bharti Infratel Limited and V Mart Retail Limited. The report evaluates the offer documents of these companies on various parameters like company introduction, risk factors, capital structure, object of issue, and basis of issue price. It points out some inconsistencies in the deployment timelines and store expansion plans of V Mart Retail Limited.
This document describes an offline portfolio management service that aims to build wealth over the long run by investing in a portfolio of selected stocks. The service involves three steps - investors plant by initially investing in the portfolio, the service nurtures the portfolio through research-driven management, and investors eventually harvest their wealth through long-term capital appreciation. Key features include a focus on hidden gem and undervalued stocks, minimal brokerage costs, and updates to subscribers when changes are made to the portfolio.
Mutual funds allow individual investors to pool their money together into a professionally managed investment portfolio. The document discusses the life stages of individual investors from young independence to retirement and how mutual funds can help investors meet their financial goals at each stage. It provides an overview of mutual fund types, including equity, debt, money market, and hybrid funds. The benefits of mutual funds are highlighted such as diversification, low costs, liquidity, and professional management. Risks of equity investing are also discussed. The mutual fund industry in India is summarized from its origins in 1964 to its current size and regulations.
This document provides information on Systematic Investment Plans (SIPs). It defines SIPs as a financial planning tool that helps create wealth by investing small sums regularly over time. SIPs allow investors to invest in mutual funds through smaller periodic investments like monthly installments instead of a large one-time investment. SIPs also help reduce risk through rupee cost averaging and benefit from the power of compounding returns. The document recommends SIPs as a means for investors to participate in market growth while diversifying risk.
The document discusses the capital raising process and initial public offerings (IPOs) in the Indian capital market. It provides details on the IPO process including pricing of shares, allocation of shares, reasons for listing, and requirements for information disclosure. It compares India's IPO process to those of the US and UK, noting that India requires more detailed disclosure and has regulations like mandatory share lockups, grading of IPOs, and disclosure of intended use of funds. Book building is the dominant method used to determine IPO prices in India.
This document provides information on IPO grading in India. IPO grading is done by credit rating agencies registered with SEBI and provides a relative assessment of an IPO's fundamentals on a 5-point scale. Obtaining an IPO grade is now mandatory for companies filing draft offer documents. The grade considers factors like industry prospects, financial position, management quality, and risks. However, the grade does not consider issue price and is not a recommendation on subscribing to the IPO. Investors must also consider risk factors and price disclosed in the prospectus.
The book discusses Warren Buffett's approach to analyzing companies using financial statements. Buffett looks for companies with durable competitive advantages, such as unique products or low costs, that allow high returns on revenue of over 20%. He favors those with consistent earnings, low expenses for research, depreciation and interest, and strong liquidity with little debt. By identifying firms with these characteristics in their financial statements, Buffett has been able to achieve remarkable investment returns over decades.
This document provides an overview of real estate investment options and strategies. It discusses:
1) Why real estate is a good investment option in India due to its low risk of downfall and ability to provide stable rental income. Investments can yield 15% returns annually.
2) How to leverage gains from property investments by taking out loans and benefiting from property appreciation. An example shows 40% ROI over 2 years.
3) Different real estate investment options like residential and commercial properties, land, REITs, and real estate funds and equities. Residential properties typically provide 3% rental returns and 15% capital appreciation annually.
The document outlines a template for tracking monthly and annual cash flows, expenses, assets and savings over a 30 year period. It includes categories for income, expenses, opening and closing savings and asset values. All cash inflow and outflow categories are included to calculate the net savings each period. Inflation and return assumptions are included to project asset growth over time. However, no actual financial values are entered into the template.
This document summarizes CRISIL's balance sheet and profit and loss statement over the past 10 years from March 2000 to December 2009. Key highlights include:
- Total shareholder equity grew from Rs. 59.67 crores in March 2000 to Rs. 412.23 crores in December 2009
- Net profits increased from Rs. 12.92 crores in March 2000 to Rs. 22.16 crores in March 2005, with an average return on equity of 23%
- Earnings per share grew at a CAGR of 27.8% from Rs. 20.83 in March 2000 to Rs. 35.75 in March 2005
This document provides an overview of real estate investment options and strategies. It discusses why real estate is a good investment in India, how to leverage gains through property investments, and potential returns over various time horizons for different types of properties like flats, commercial spaces, and land. It also covers real estate investment trusts and equity, and stresses the importance of including real estate in long-term wealth creation plans to generate passive income and meet future cash flow needs. Due diligence on property documents and working with local experts is advised.
This document provides an overview of real estate investment options and strategies. It discusses:
1) Why real estate is a good investment option in India due to its low risk of downfall and ability to provide stable rental income. Investments can yield 15% returns annually.
2) How to leverage gains from property investments by putting a small down payment and paying the rest over time, allowing property appreciation to generate high returns.
3) Different real estate investment options like residential and commercial properties, land, REITs, and real estate funds and equities. Residential properties typically provide 3% rental returns and 15% capital appreciation annually.
Finding StocksFinding Stocks the Warren Buffett Wayby John Bajkows.docxvoversbyobersby
Finding StocksFinding Stocks the Warren Buffett Wayby John BajkowskiLike most successful stockpickers, Warren Buffett thinks that the efficient market theory isabsolute rubbish. Buffett has backed up his beliefs with a successful track record throughBerkshire Hathaway, his publicly traded holding company.Maria Crawford Scott examined Warren Buffett's approach in the January 1998 issue of the AAIIJournal. Table 1 below provides a summary of Buffett's investment style. In this article, wedevelop a screen to identify promising businesses and then use valuation models to measurethe attractiveness of stocks passing the preliminary screen.Buffett has never expounded extensively on his investment approach, although it can begleaned from his writings in the Berkshire Hathaway annual reports. Many books by outsidershave attempted to explain Buffett's investment approach. One recently published book thatdiscusses his approach in an interesting and methodical fashion is "Buffettology: The PreviouslyUnexplained Techniques That Have Made Warren Buffett the World's Most Famous Investor," byMary Buffett, a former daughter-in-law of Buffett's, and David Clark, a family friend andportfolio manager [published by Simon & Schuster, 800-223-2336; $27.00]. This book was usedas the basis for this article.Monopolies vs. CommoditiesWarren Buffett seeks first to identify an excellent business and then to acquire the firm if theprice is right. Buffett is a buy-and-hold investor who prefers to hold the stock of a goodcompany earning 15% year after year over jumping from investment to investment with thehope of a quick 25% gain. Once a good company is identified and purchased at an attractiveprice, it is held for the long-term until the business loses its attractiveness or until a moreattractive alternative investment becomes available.Buffett seeks businesses whose product or service will be in constant and growing demand. Inhis view, businesses can be divided into two basic types:Commodity-based firms, selling products where price is the single most important factordetermining purchase. Buffett avoids commodity-based firms. They are characterized with highlevels of competition in which the low-cost producer wins because of the freedom to establishprices. Management is key for the long-term success of these types of firms.Consumer monopolies, selling products where there is no effective competitor, either due to apatent or brand name or similar intangible that makes the product or service unique.While Buffett is considered a value investor, he passes up the stocks of commodity-based firmseven if they can be purchased at a price below the intrinsic value of the firm. An enterprisewith poor inherent economics often remains that way. The stock of a mediocre business treadswater.How do you spot a commodity-based company? Buffett looks for these characteristics:The firm has low profit margins (net income divided by sales);The firm has low return on equity (earnings per share ...
Warren Buffett is an American business magnate, investor, and philanthropist. He began investing at age 11 and formed his own investment partnership in 1956, turning $105,000 into $26 million in 9 years. In 1962 he purchased Berkshire Hathaway, which he transformed into a holding company making numerous acquisitions. With a net worth of over $50 billion, Buffett prioritizes value investing and looks for companies with strong brands, understandable businesses within areas of expertise, and sound management that can increase profitability and returns over the long run.
Warren Buffett is known as "The Sage of Omaha" and is one of the most successful investors of all time. He focuses on value investing by purchasing stocks of companies that are trading significantly below their intrinsic value. Some key aspects of his investment approach include analyzing a company's long-term earnings growth, return on equity, profit margins, and competitive advantages. His portfolio management firm, Berkshire Hathaway, has generated high annual returns over the decades by purchasing shares of undervalued, well-managed companies and holding those positions for long periods of time.
Warren Buffett is one of the most successful investors of all time. He began buying stocks at age 11 and learned from value investing pioneer Benjamin Graham. Buffett builds economic "moats" around companies with sustainable competitive advantages. His investment methodology focuses on analyzing a company's long-term earnings potential and only investing when he believes a stock is undervalued by at least 25%. Buffett takes a long-term, passive approach to generating market-beating returns and is also known for his candid management style and philanthropic efforts.
Warren Buffett is one of the most successful investors of all time. He began buying stocks at age 11 and learned from value investing pioneer Benjamin Graham. Buffett built Berkshire Hathaway through acquisitions and investing in undervalued companies. His investment approach focuses on finding companies with sustainable competitive advantages that are trading below their intrinsic value. Buffett prioritizes rational and candid management and avoids companies simply following industry trends. His patient investment style and focus on value have delivered significant long-term returns, making him one of the richest people in the world.
Warren Buffett is one of the most successful investors of all time. He began buying stocks at age 11 and learned from value investing pioneer Benjamin Graham. Buffett builds economic "moats" around companies with sustainable competitive advantages. His investment methodology focuses on analyzing a company's long-term earnings potential and only investing when the stock price is at least 25% below his calculated intrinsic value. Over decades, Buffett's focus on low-risk, undervalued companies has led Berkshire Hathaway's stock to consistently outperform the market.
This document provides an overview of Warren Buffett's biography, investment approach, and management style. It discusses that Buffett has been investing since childhood, learned from Benjamin Graham, and founded Berkshire Hathaway in 1965 which he has built into a massive holding company. His value investing approach focuses on buying shares of companies with a competitive advantage that are trading below their intrinsic value. Buffett prioritizes rational, candid management and resists pressure to conform to industry trends.
The document provides an overview of Warren Buffett's career and investment approach. It discusses how he got his start in investing as a child, worked for Benjamin Graham, and eventually started his own partnership that became Berkshire Hathaway. It outlines his value investing strategy of focusing on companies with sustainable competitive advantages and purchasing them at a discount to their intrinsic value.
This document provides an overview of Warren Buffett's biography and investment approach. It describes how he began buying stocks at age 11 and worked for his mentor Benjamin Graham. It outlines his strategy of focusing on companies with sustainable competitive advantages, high returns on equity, and purchasing stocks at a discount to their intrinsic value. The document also discusses Buffett's management philosophy of looking for rational, candid and independent thinking among a company's leadership.
Warren Buffett is known as the "Sage of Omaha" and is one of the most successful investors of all time. He began buying stocks at age 11 and learned from value investing pioneer Benjamin Graham. Buffett founded Berkshire Hathaway and grew it into a multibillion dollar company through value investing. He looks for companies with sustainable competitive advantages, analyzes their intrinsic value compared to stock price, and takes a long-term view. Buffett's success demonstrates the power of patience, discipline and focusing on fundamentals rather than short-term fluctuations.
The document provides advice on maximizing the value of a business for sale by focusing on succession planning and finding a strategic buyer. Some key points:
- 55% of Australian business exits are due to failures like bankruptcy or illness rather than planned succession.
- Business owners need to dedicate time to strategic succession planning to attract well-prepared buyers and maximize sale value.
- Finding a strategic buyer who can leverage your business's value, like Apple purchasing voice recognition software, can yield a higher sale price than the business is worth.
- Owners should relentlessly focus on attracting strategic buyers by aligning their business with potential buyers' products and customers. This can result in premium prices like Facebook
1. What is the difference between corporate finance and entrepreneurial finance?
2. How do we know whether an idea has the potential to become a viable business opportunity?
3. Describe and discuss some of the best financial practices of high growth, high performance firms. Why is it also important to consider production and operation practices?
4. Identify some types of financing that are associated with each of the following stages of new venture development: research and development, start up, early growth, rapid growth and exit?
5. At what stage of venture development is each of the following most likely to invest, an angel investor? A venture capitalist? Why?
THE WARREN BUFFET WAY- Investment Strategies of the World’s Greatest InvestorRoziana Mohammad
Warren Buffett is an 86-year-old American business magnate, investor, and philanthropist, known as a long-term value investor and the most successful investor of the 20th century. He is the CEO of Berkshire Hathaway and has a net worth of over $60 billion as of 2014. Buffett follows the value investing principles of his mentor Benjamin Graham, focusing on buying shares of high-quality companies trading at a discount to their intrinsic value. Some of Buffett's key investment strategies include maintaining a margin of safety when valuing companies, viewing the stock market as Mr. Market who occasionally offers irrational prices, and taking a long-term buy-and-hold approach to allow companies' intrinsic
The document discusses acquiring an established business venture through purchasing an existing business. It notes that buying an existing business can represent less risk than starting a new business from scratch. However, one must perform due diligence to understand the terms of the purchase. The document provides advice on evaluating business opportunities and established ventures through examining financial records, operations, competition, and viability factors. It also discusses different business valuation methods like asset-based, earnings-based, and market-based approaches.
Five Rules for Successful Stock Investing Book.pptxYashJain483049
The document provides an overview of five rules for successful stock investing according to author Pat Dorsey. The rules are to do thorough research on companies, find those with strong economic moats or competitive advantages, invest with a margin of safety below fair value, take a long-term approach by avoiding short-term trading, and know when to sell based on changes in company fundamentals or opportunities for better investments. The document also discusses evaluating a company's profitability, barriers to entry and costs that create economic moats, and provides examples of moats for some Indian companies.
This document discusses various methods for harvesting or exiting a business. It describes selling the firm to strategic buyers, financial buyers, or employees. Going public through an initial public offering is another option. Private equity recapitalization allows an entrepreneur to cash out some investment while continuing to operate. Developing an effective harvest plan involves anticipating the harvest early, separating personal and business interests, managing conflicts, getting good advice from advisors and other entrepreneurs, and understanding one's motivations for exiting.
Five key elements that drive the value of your businessMatthew Wirgau
Use These Five Fundamentals to Increase Your Business Value
Every business owner, Board of Directors, CEO, President, or entrepreneur should know the value of their business.
Because it’s hard to accurately determine the value of a business, many just ignore it. Too often, business owners get a mistaken view of value when they hear the price that another business owner received. I call this “the Valuation Gap”.
Business value is a combination of profitability, future certainty of profits, and the transfer-ability of the profits to a new business owner.
Knowing the value of your business is a prerequisite to good management.
Even if you have no intention of selling and you will be passing your business on to your next generation, you should know its value.
Going through the valuation process gives insight into your company’s historical performance and its potential future.
If you know the value of your business, you will be more prepared to make effective management decisions that will make it more successful in the future. If you don’t know the value of your business and what is driving its value, you could very easily end up doing things and making mistakes that will destroy its value over the long-term.
The document discusses various aspects of entrepreneurship including what entrepreneurship is, characteristics of entrepreneurs, advantages and disadvantages of being an entrepreneur, different forms of business ownership like sole proprietorship, partnership and corporations. It also talks about acquiring existing companies through bankruptcy, business brokers or networking. Key steps in starting a new company or acquiring an existing one are identified. The document concludes with lessons learned from experience and the importance of entrepreneurship programs at universities.
Warren Buffett is one of the most successful investors of all time. He mentored under Benjamin Graham, the father of value investing, and combines Graham's approach with elements of Philip Fisher's growth investing. Buffett believes in only buying stocks at a price well below the intrinsic value of the business, determined by factors like assets, earnings, and future prospects. This provides high returns but also a margin of safety if things don't work out. He sees the stock market as Mr. Market, who offers daily prices that may be too high or too low, and investors are free to ignore Mr. Market if they don't like the price. Buffett's strategy focuses on finding wonderful businesses with long-term value and buying
3. . World’s wealthiest five - Forbes Feb 2010 Carlos Slim Helu –Mexico -$ 53.3 B – Mobile companies William Henry Gates –US - $ 53 B –Microsoft Warren Buffet – US - $ 47 B –Berkshire Hathway MukeshAmbani –India $ 29 B – Reliance Industries LakshmiMittal –UK -$ 28.7 B – ArcelorMittal
4. . Warren Buffet –The sage of Omaha One of the most successful investors in the world Noted for his adherence to “Value Investing” Also known for his personal frugality Born in 1930, second of three children, father was a stock broker and politician Early in school age, he started earning by selling soft drinks and delivering paper At 14 years, with his earning, he bought 40 acres of land –which he rented out He went to Columbia for graduation - studied under Benjamin Graham –father of Value investing
5. . Warren Buffet –The sage of Omaha Benjamin Graham refused to hire him –saying Stock broking and Wall street was not for him Warren Buffet came back –got married and stayed in Omaha with his father’s brokerage Benjamin Graham changed his mind and gave him a job in his NY office Value investing means seeking stocks selling at extraordinary discounts to the value of it’s underlying assets –defined as “Intrinsic value” Buffet went a step beyond Value investing – he looked at the value of a good management team, product’s competitive advantage in marketplace
6. . Warren Buffet –The sage of Omaha In 1956, he came back to Omaha and launched Buffet Associates Ltd In 1962, already a 30 year old millionaire –he joined forces with Charlie Munger This collaboration eventually resulted in the investment philosophy of Value investing that helped Buffet to get where he is today Along they way, they purchased a dying textile mill called Berkshire Hathaway - as a long term investment Cash flows from this mill were used to fund other investments – eventually other investments overshadowed the textile business In 1985, Buffet shut down the textile business – but continued with the company as a holding company
7. . Warren Buffet –The sage of Omaha Buffet pick up stocks in what he believes are well managed under valued companies When he purchases any stock – his intention is to hold the stocks for infinite period of time Coke, Amex, Gillette etc are such stocks held by him for many decades He also purchases companies outright and let’s their management teams handle their day to day business
8. . Warren Buffet –The sage of Omaha An investor and a businessperson should look at a company in the same way. The businessperson wants to buy the entire company while an investor wants a part The first question any businessperson will ask is, ‘‘What is the cash generating potential of this company?’’ Over time, there will always be a direct correlation between the value of a company and its cash generating capacity. The investor would benefit by using the same business purchase criteria as the businessperson
9. . Warren Buffet –his investment philosophy The basic idea of investing are to look at stocks as business, use the market’s fluctuations to your advantage, and seek a margin of safety. Warren Buffett seeks first to identify an excellent business and then to acquire the firm if the price is right Once a good company is identified and purchased at an attractive price, it is held for the long-term until the business loses its attractiveness or until a more attractive alternative investment becomes available.
10. . Warren Buffet –his investment philosophy Buffett seeks businesses whose product or service will be in constant and growing demand. In his view, businesses can be divided into two basic types: Commodity-based firms, selling products where price is the single most important factor determining purchase. Buffett avoids commodity-based firms. They are characterized with high levels of competition in which the low-cost producer wins because of the freedom to establish prices. Management is key for the long-term success of these types of firms.
11. . Warren Buffet –his investment philosophy Buffett seeks businesses whose product or service will be in constant and growing demand. In his view, businesses can be divided into two basic types: Consumer monopolies, selling products where there is no effective competitor, either due to a patent or brand name or similar intangible that makes the product or service unique.
12. . Warren Buffet – there are three types of consumer monopolies Businesses that make products that wear out fast or are used up quickly and have brand-name appeal that merchants must carry to attract customers. Nike, McDonalds, Drug companies with patents are good examples Communications firms that provide a repetitive service that manufacturers must use to persuade the public to buy the manufacturer's products. Advertising agencies, magazine publishers, newspapers, and telecommunications networks are good examples Businesses that provide repetitive consumer services that people and businesses are in constant need of. Tax preparers, insurance companies, investment firms are good examples
13. . Warren Buffet – how does he spot a commodity based business The firm has low profit margins (net income divided by sales) The firm has low return on equity (earnings per share divided by book value per share) Absence of any brand-name loyalty for its products The presence of multiple producers The existence of substantial excess capacity Profits tend to be erratic The firm's profitability depends upon management's ability to optimize the use of tangible assets.
14. . Warren Buffet – how does he spot a consumer monopoly The firm has managed to create a product or service that is somehow unique and difficult to reproduce by competitors due to Brand name loyalty A particular niche that only a limited number of companies can enter An unregulated but legal monopoly like patents A strong upward trend in earnings Conservative financing A consistently high return on shareholder's equity A high level of retained earnings Low level of spending needed to maintain current operations Profitable use of retained earnings
15. . Warren Buffet –his investment philosophy While Buffett is considered a value investor, he passes up the stocks of commodity-based firms even if they can be purchased at a price below the intrinsic value of the firm. An enterprise with poor inherent economics often remains that way.
16. . Warren Buffet –his investment philosophy Investment in stocks based on their intrinsic value, where value is measured by the ability to generate earnings and dividends over the years. Buffett targets successful businesses--those with expanding intrinsic values, which he seeks to buy at a price that makes economic sense, defined as earning an annual rate of return of at least 15% for at least five or 10 years.
17. We will now get into specifics There are 14 questions that we need to answer We will take one corporate example –CRISIL to understand the overall flow of thoughts
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20. . Questions to determine the attractiveness of business – Q1 Is it a consumer monopoly or commodity business –does it have an identifiable durable competitive advantage? Consumer monopolies typically have high profit margins because of their unique niche Beyond high profit margins, look for companies with operating margins and net profit margins above their industry norms Also look for strong earnings and high return on equity will also help to identify consumer monopolies. Look at a detailed study of the firm's position in the industry and how it might change over time. CRISIL – Yes –it is a pioneer, market leader and an well known brand in India
21. . Questions to determine the attractiveness of business – Q2 Do you understand how the product /service/business model works? Only invest in industries that you understand – for example Buffet refused to invest in ecommerce companies during the dot com boom because he did not understand their business CRISIL – Yes – corporates want their financial instruments rated –Crisil rates them and corporates use this rating to advertise their credibility.
22. . Questions to determine the attractiveness of business – Q3 What is the chance that the product /service/business model would be obsolete in the next 20 years? Will there be a market for this product 20 years from now If there is going to be technological changes envisaged, then will this company have an upper hand still? CRISIL –rating is an expert’s job that cannot be automated. There will always be need for rating and corporates will need this service
23. . Questions to determine the attractiveness of business – Q4 Does the company allocate capital exclusively in the realm of expertise? Where have been their investments in the past 5-10 years? Does the company stick with what it knows? CRISIL – Yes it does not seem to be spending outside it’s area of expertise
24. . Questions to determine the attractiveness of business – Q5 What has been the company’s EPS history and growth rate The company must show a consistent growth in EPS over the past 10 years Erratic growth and dips in EPS would mostly make the company unattractive for investment unless there is a clear enough reason visible as to why it happened.
25. CRISIL’s EPS growth rate ( last 10 years) CAGR of EPS adjusted for shares issued for the period is - 27.8%
26. . Questions to determine the attractiveness of business – Q6 Is the company consistently earning high Return on equity The company must show a consistently high ROE over the past 10 years – ROE = reported net profit /Net worth CRISIL – has an ROE ranging from 13.5% to 39.5% with an average ROE of 23%
27. . Questions to determine the attractiveness of business – Q7 Is the company consistently earning high Return on total capital? The company must show a consistently high Return on total capital employed over the past 10 years ROCE = Reported net profit /Total liabilities in BS CRISIL – as they have no loans – the ROE and ROCE are the same and the average ROCE is 23%
28. . Questions to determine the attractiveness of business – Q8 Is the company conservatively financed? Consumer monopolies tend to have strong cash flows, with little need for long-term debt Screen for companies with no debt or low debt – look at the interest coverage ratio –compare with industry peers CRISIL – has no loans in it’s balance sheet – it is very conservatively financed
29. . Questions to determine the attractiveness of business – Q9 Has the company been buying back its shares? Buffett prefers that firms reinvest their earnings within the company, provided that profitable opportunities exist. When companies have excess cash flow, Buffett favours shareholder- enhancing manoeuvres such as share buybacks CRISIL – No -it has not yet bought back shares – in fact it has issued small amount of shares in the period 2003 to 2007
30. . Questions to determine the attractiveness of business – Q10 Is the company free to adjust prices to inflation? True consumer monopolies are able to adjust prices to inflation without the risk of losing significant unit sales. CRISIL – Yes – it can increase it’s prices as it is in a near monopoly market
31. . Questions to determine the attractiveness of business – Q11 Does company need to constantly reinvest in capital? Retained earnings must first go toward maintaining current operations at competitive levels, so the lower the amount needed to maintain current operations, the better. CRISIL –Really no - it’s business model depends on it’s credibility and quality of manpower employed and the knowledge retention – these do not need large amount of investments
32. . Questions to determine the attractiveness of business – Q12 What is the initial rate of return (IRR) and relative value to a Govt bond? EPS for the year divided by the long-term government bond interest rate. The resulting figure is the relative value - the price that would result in an initial return equal to the return paid on government bonds. We then have to look at the CAGR of the EPS as well. CRISIL – assuming a 8% govt bond rate – and based on the current EPS of 212.43 – the relative value of govt bond would be –Rs 2655.37. With the current share price of Rs. 6132 – the Crisil share gives a pretax return of 3.46% with the returns growing at 27.8% pa
33. . Questions to determine the attractiveness of business – Q13 What is the projected share value and return on investment using historical earnings growth rate: Calculate the CAGR of EPS for the past 10 years Calculate the average dividend payout ratio (DPS/EPS) for the past 10 years Calculate the average PE for the last 10 years CRISIL – CAGR of EPS is 27.8% Average Dividend payout ratio is 33.95% Average PE for the last 10 years has been – 20.55
34. . Questions to determine the attractiveness of business – Q13 What is the projected share value and return on investment using historical earnings growth rate: Calculate the EPS for the next 10 years as follows: EPS of year 2 = EPS of year 1 * CAGR of EPS Calculate the dividend payout for the next 10 years as follows: Dividend payout for year 2 =EPS for year 2 * average DP ratio Calculate the sum of all the dividends paid for the next 10 years
36. . Questions to determine the attractiveness of business – Q13 What is the projected share value and return on investment using historical earnings growth rate: Projected share price at 10th year = EPS at 10th year * Average PE ratio Total estimated gain at the end of 10th year = Projected share price at 10th year + Sum of all dividends for 10 years Calculate the CAGR of your investment in 10 years – FOR CRISIL THIS IS 24.37%
38. . Questions to determine the attractiveness of business – Q14 What is the projected share value and return on investment using sustainable growth rate: Calculate the average PE ratio for the past 10 years -20.545 Calculate the average ROE for the past 10 years -23% Calculate the average dividend payout ratio for the past 10 years – 33.95%
39. . Questions to determine the attractiveness of business – Q14 What is the projected share value and return on investment using sustainable growth rate: Calculate the Book value of the share for the next 10 years using the formula: BV for year 2 = BV for year 0 + Retained earnings for year 1 Retained earnings for year 1 = Projected EPS for year 1– Projected Dividend Payout for year 1 Projected EPS for Year 1 = average ROE * BV for Year 0 Projected dividend payout for year 1 = EPS for year 1* average Dividend payout ratio for past 10 years
41. . Questions to determine the attractiveness of business – Q14 What is the projected share value and return on investment using sustainable growth rate: Calculate the EPS for year 10 Calculate the expected Share Price for year 10 = EPS (FY10)* Average PE To this share price estimate, add the estimated dividends paid for the next 10 years Calculate the expected CAGR of your investment today