* One must appreciate that sooner or later 'great quality' would reflect into 'great quantity' sooner or later .
· Some qualitative question in analysing company -
Q- How are things changing around (consumers takes and performance) ?
Q- What would be relevant tomorrow and what would become irrelevant ?
Q- How is competition shaping up in industry ? Who are new entrants including external ones ?
Q- Entry barriers in that industry .
Q- Why would business continue to lead ?
Q- How is the quality of the management ?
Q-What is the perception of bankers and other stake holders of the company towards it ?
There are many more questions but these are must to ask before investing in a company .
· Understand business and business models
Starting point of qualitative research on nay business has to be question such as -
Q- What does company do and how does company do ?
Q- Who are the customers and why do customers buy those products and services from that of the company ?
Q- How does company serve those customers ?
Always remember competition in market place is not between products and services but between the business models of the competing company .
There should a Moat in a business which makes them the leading business in the industry and you should know about about it . You can find these type of information in company's annual reports whiich they publish in the end of the financial year .
· Competitive advantage/points to differentiating over the competitors -
1) Brands - "Products sell but brands profit".
Nestle's Maggi is a classic example of brand ruling the market for long time and differentiating company from the peers .
2) Long track record -
Companies like SBI 'which are around 200 years old and GE in international market give confidence to investors as these companies have seen many business cycles and many recession and the business is still going thus we can also predict that company's management is also good .
3) Clean and ethical management - TATA's and Infosys are the living testimony to the importance of ethical behavior. They are quite old companies and again their brands have strengthened due to thisn single factor ETHICS , in addition to many more competencies .
4) Takeover / Buyouts - Aggressive inorganic expansion this phenomenon is known as Takeover and Buying another company this phenomenon is known as Buyouts . If one company doing these kind of things then its okay to be with that of the company .
This give an advantage to the company because now they can have an option to pledge money either from parent company or from daughter company against their company's share and the money/funds can be taken from only one company without facing any hassle.
5) Monopoly / Large market share -This is again a function of presence of strong brands or products becoming brands themselves . Fevicol , LIC , Bisleri , etc are some of the example of companies which have created monopoly in the industry .
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Now we will discuss about an analysis which is also known as SWOT ANALYSIS to briefly understand about company .
· Strength , Weakness , opportunities and threat analysis (SWOT ANALYSIS) -
In SWOT analysis we will discuss about strength , weakness opportunities and threat company can face in the industry .
SWOT analysis is the first thing to analyse in a company and its quite easy to analyse company from this method . This is an important analysis
So do add this in your investing checklist so that you won't regret on your investment .
SWOT ANALYSIS -
In SWOT analysis strength and weakness are internal factors in the company where opportunities and threats deal with the external environment of the business.
Its quite basic and name itself clarifies that in the SWOT analysis we used to study about strength weakness and all so in -
·Strength - We look for the things which works as strength in the company/business. This can be management , Integrity or can have some loyal customer base such as PW that is Physics Wala(101th Unicorn) has loyal customer base .
He started with the YouTube channel so , its the strength of the company that company's owner has made that kind of clear image in the market .
·Weakness - Here, company's weakness can be anything , it can be just opposite of things we discussed in strength or can be some financial things like can't satisfy their investors or negative cash flows or can't generate enough PAT(profit after tax), anything which is necessary for running the company.
·Opportunities - You should look for the opportunities for example for telecom its 5G internet network for which every one is looking for or we can say that people willing to have , so here telecom companies don't have to advertise it nor they have to make people realise why they need 5G network so this can be the opportunity for telecom industry thus who will able to make it faster that is whom avail the opportunity.
·Threat - Threat can be anything for a company threat from peers, from some global issues like currency and all e.g. rupee is losing its value to dollar so its quite a disturbing thing for Indian economy because we got some real things happen/done in this millennial era so this doesn't affect the our economy .
So this is it for the company analysis in this blog , if the management of the company is good enough then its better to join or invest in that of the company no matter how is the company's quarter result .
There is also a quote from the OG investor which goes like:-
I look for integrity, energy and intelligence in management of a company before investing in one.
~Warren Buffett
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So that's it for the read , do subscribe to read more and also if you want to learn more about the finance and case studies of the companies .
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