Analysts Corner

MIDDLE - CLASS - MORALITY

I ask you, What am I ? I am one of the undeserving poor, that’s what I am. Think of what that means to a man. It means that he is up against middle class morality all the time. If there’s anything going, and I put in for a bit of it, it is always the same story: you are undeserving, so you can’t have it. But my need is as great as the most deserving widow’s that ever got money out of six different charities in one week for the death of same husband. I don’t need less than a deserving man . I need more. I don’t eat less hearty than him, I drink a lot more. I want a bit of amusement, cause I am thinking man. I want cheerfulness and a song and a band when I feel low. Well they change me just the same for everything as they charge the deserving. What is middle class morality?

Just an excuse for never giving me anything.

👨‍💻👨‍💻👨‍💻

"My Stock Is Cheaper Than Your’s"
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Suppose you want to buy a 3 BHK flat & near Bandra, and you found a property which filling your all requirement. The cost of that flat is 21 CR. What will you first reaction.

Will you buy it ? Answer will that you can’t make decision , because every one want to know that it is worth to 21 Cr or not. Value of flat is undervalued or over valued . So what is the way to find out exact value of that flat. Read the below way to arrive at the value of flat against the price of 21 Cr…

1 ) The first and very easy way, just find out the same flat with same facility & at same location, compare the price and you will get idea that you going to pay more or less compare to others. It will not accurate but you will very close to real value.

2 ) Very accurate way is to you estimate the cost material that used to build that flat, including labor & management charges and ofcourse builder profit. It is slightly complicated & difficult process but you will get exact value of that flat.

3) You can calculate income that flat can generate by putting same flat on rent & calculate future cash flow ( Rent) for the next 5-6 year, and flat price after 5-6 year, and discount both at current fd+inflation rate. If calculative amount is more than 21 Cr then you should go for it but if it less than 21 cr it means you paying more for same.

Easy, is it not ? So when you want to find out the real value of any stock these are the only way . Let me put down in order of above example.

1 . Relative Valuation ( by calculating P/E , P/S. P/CF, EV/EBITDA)
2. Asset Based Valuation
3.Discounted Cash flow (Further divide into two more method )
1. Dividend Discount Model
2. Free Cash Flow to Firm ( FCFF)
3. Free Cash Flow to Equity ( FCFE)

In Next post I will explain Each one method in very easy step.

The End of Growth

If you following current situation of Indian economy , then definitely you thinking about some questions like, What went wrong ? Was there a policy mistake ? Can we coax growth to return and stay ? What magic button do we need to press ? Is China Immure to this slow down ?

Economist have been busy answering these questions. Countless books and paper have been written about them. After all that what is it that can be said with confidence about how to make a rich economy grow faster?

Before moving further let me write down factors that can impact any economy.

1 ) Political environment
2 ) Skills labor of that country
3) International crude price
4) Growth in manufacturing sector
5) Strong banking system to support every sector to grow

and when we talk about country like India then of course we cant ignore Agriculture growth & purchasing power of citizen.

Now if you look in above factor and relate them with country like india , then you will realize that after many decade of freedom we are still struggling at same issue.

Now looks at current Scenario of indian economy.
Our GDP growth rate is 4.5% , inflation at 7%. unemployment rate at all time high, financial & fiscal deficit are out of control. So can be say it is all policy mistake ?

The debate has reolved around two questions. First will sustained fast productivity growth eventually return? Second, is the measurement of GDP, at best a bit of an exercise in guesswork, somehow missing all the joy and happiness the new economy in bringing us ?