Fundamental analysis of shares
November 11th, 2008
Before doing actual investment one must study following things.
Equity – Initially an amount of capital is invested or used to start the company to run its operations by issuing shares or the equally divided parts as per the amount of investment.
Holding pattern – Every Company has some share holding pattern.
a. Promoter’s holdings.
b. Domestic financial institutions like UTI, LIC, GIC, Banks etx,
c. Foreign Financial Institutions (FII)
d. Individual big share holders
e. Trusts.
f. Public in general
Face Value
It can be 100 or 50 or 10 or 5 or 2 or 1.
E.P.S
It is the net profit calculated on trailing twelve-month basis. Aggregate net profit of four consecutive quarters divided by fully diluted equity capital. E.g. If company has issued 2 Crore shares and if net profit is Rs. 4 crore. The E.P.S becomes Rs 2/- per share.
P. E. Ratio
Price to earning ration. P.E is calculated by dividing days closing price of share by its EPS – Earning per share. The while industry P/E is aggregate market capitalization fo total industry divided by aggregate net profit of lst four quarters after excluding loss making companies . e.x. If the price of the share is Rs 20 and EPS is Rs $ then the PE ratio becomes Rs. 5.
Continued…..