Stock Market Education

  Financial Ratios =Management Efficiency Ratios Last week we had seen details about some Management Efficiency Ratios like Total Asset Turnover Ratio, Inventory Turnover Ratio and Inventory Number of Days. This week we shall try to understand the remaining two-Management Efficiency Ratios which are - Receivables Turnover Ratio and Days of Sales Outstanding. Receivables Turnover Ratio: The receivables turnover ratio is the ratio of Net Sales to the Average Accounts Receivable. Accounts Receivable Turnover Ratio = Revenue / Average Receivables This financial ratio indicates how many times in a given period of time, the company receives money from its debtors and customers. In other words, it shows company's effectiveness in extending credit and in collecting debts on that credit. Higher the ratio, better it is as a high number indicates that the company collects cash more frequently. Days of Sales Outstanding:   Days of Sales Outstanding (DSO) also known as ...

PRESSMAN ADVERTISING   CMP 17 ENTRY 15 TO 16 STOP LOSS  12 TARGET 34-38 TIME: 18 MONTHS   Incorporated in 1983, Kolkata based Pressman Advertising Ltd. operates as an advertising agency. The company specializes in media planning and buying, design, digital, and public relations. It offers corporate, brand/product, financial, and government advertising services. The company also provides public relations consultancy services, such as corporate communications, marketing communications, financial communications, media relations, analyst Relations, crisis communications, and digital communications. It has an equity base of just Rs.4.70 crore that is supported by reserves of aroundRs.34.75 crore. It is debt free company. The Promoters hold 47.19% while the investing public holds 52.81% stake in the company.   During Q1FY21, its net profit stood to Rs.1.65 crore on income of Rs.2.14 crore fetching an EPS of Rs.0.70. Currently, the stock trades at a P/E of just 7.45x. Its ...

  After enjoying a one way parabolic rise since March; Correction had become a necessity for the wellbeing of the Market. After breaching the steep Support Trend line two weeks back, the Correction intensified in the week gone by. Markets corrected this week, before finding Support at the 200dma. Interestingly, Friday saw a bounce-back from the 200dma which helped the Nifty close above the 11000 mark, but it does not signal an end to the Correction. The daily as well as weekly candlestick pattern suggests continuation of bearishness. Also the completion of Head & Shoulders pattern indicates bearish connotations in the near term. It has a bearish Target of Nifty 10588 and hence any upward price movement for a day or two will not negate the Bearish Head & Shoulders pattern. . Technically Speaking:-      Sensex opened the week at 38812, made a high of 38990, low of 36495 and closed the week at 37488. Thus it closed the week with a loss of 1357 points. At the...

  Financial Ratios Management Efficiency Ratios   Last week we had seen details about Return on Equity (ROE), Return on Capital Employed (ROCE) and Return on Asset (ROA). This week we shall try to understand Liquidity Ratios. This week we shall try to understand some other Management Efficiency Ratios like Total Asset Turnover Ratio, Inventory Turnover Ratio and Inventory Number of Days. Total Asset Turnover Ratio : The total asset turnover ratio is the ratio of net sales to the total assets of the company which include both the fixed assets and the current assets. Total Asset Turnover Ratio = Net Sales / Average Total Assets This ratio is used to measure how efficiently a company can use its assets to generate sales. Inventory Turnover Ratio : Inventory turnover ratio is the ratio of Cost of Goods Sold to the Average Inventory. This ratio helps us to analyze how popular are companies products. If the company's products are really popular the inventory turnover ratio wou...

                 Veto Switchgears and Cables Ltd CMP46 ENTRY 4 TO 44 STOPLOSS 30 TARGET 90++ TIME: 18 MONTHS   Veto Switchgears and Cables Limited is one of the largest and most diversified manufacturer of electrical and telecommunication cables. The Company has been maintaining its leadership in manufacturing of Industrial Wires and Cables since the last 50 years. Its recent foray into LED segment underpins its attempt to emerge as a leading and preferred electric solutions provider from being a mere wires and cables manufacturer It has an equity base of just Rs.19.12 crore that is supported by reserves of around Rs.158.65 crore. The Promoters hold 54.22%, FIIs hold 4.12% while the investing public holds 41.66% stake in the company.   In spite of the lockdown, VSCL has reported stable numbers for Q1FY21 with PAT of Rs.2.26 crore on sales of Rs.23.05 crore with an EPS of Rs.1.18. Currently, the stock trades at a P/E of 9x. Its ...

  For the entire last week, except for Wednesday, Nifty has taken Support at the 20dma. Two weeks back after bouncing back from the 50dma, Nifty has formed an intermittent bottom at 11185.Thus the Nifty is now confined in a Trading Range from 11200-11800. A bearish break of Trading Range can lead the Nifty down to test the long term average of 200dma whereas a Bullish breakout can open the gates for Nifty to test the life high levels at 12400. The Weekly Bearish Engulfing formed two weeks back is still not out of the equation as the last two week's candle formation are almost neutral formations. Only a close above 11800 will negate this Weekly Bearish Engulfing pattern. Till then one should focus on Mid Cap and Small Cap stocks which again out-performed the front line indices by more than 3%. But the Star Sectors for the week were Pharma and IT which went up by a stunning 8% and 6% respectively, and the out-performance is likely to continue. Technically Speaking :- Sensex opene...

  Financial Ratios   Management Efficiency Ratios   Last week we had seen details about Return on Equity (ROE), Return on Capital Employed (ROCE) and Return on Asset (ROA). This week we shall try to understand Liquidity Ratios. Management Efficiency Ratios help us to evaluate the ability of the management to use its assets and manage its liabilities effectively. Commonly used Management Efficiency Ratios include – 1. Fixed Asset Turnover Ratio 2. Working Capital Turnover Ratio 3. Total Asset Turnover Ratio 4. Inventory Turnover Ratio 5. Inventory Number of Days 6. Receivables Turnover Ratio 7. Days of Sales Outstanding Fixed Asset Turnover Ratio: The fixed-asset turnover ratio is the ratio of net sales to the fixed assets of the company. Fixed Asset Turnover Ratio = Net Sales / Average Net Fixed Assets This ratio is used to measure the operating performance of the company, i.e., how efficiently a company is producing sales with its machines a...

  After forming a Bearish Engulfing pattern, the Nifty as expected started moving lower before finding some Support. The Rescue act was done by the 50dma which acted as a Support. The bounce-back has once again raised questions about the strength of bearishness, which had started with the formation of Bearish Engulfing pattern. To be fair to the Bears, the Market is in such a Bull grip that any attempt by the Bears to pull the Market down, comes undone and it ends up as a Buying Opportunity. But the Bearishness of the Bearish Engulfing pattern is still intact and it will get nullified only when Nifty closes above 11794. A break of 50dma (11189) will result in a Bearish pattern formation, which can lead the Nifty down to test the 200dma (10793). One needs to maintain focus on Mid-caps and Small-Caps as they are more likely to continue with their out-performance . Technically Speaking:-      Sensex opened the week at 38284, made a high of 38978, low of 37935 and cl...

  P G FOILS LTD CMP 80 ENTRY 75 TO 80 STOP LOSS  60 TARGET 130-140 TIME: 18 MONTHS     PG Foils is a flagship company of Prem Group, having varied interest in manufacturing of overhead conductor for power transmission lines, manufacturing machinery for Conductor Manufacturing, Aluminum rod, Wire and Aluminum Foils and its laminate. The group has also interest in farming and investment. PG FOILS LIMITED with the third largest aluminium foil rolling capacity in India, and whose product are used in various industries ranging from pharmaceutical, food & beverages, communications, air conditioning and health products etc. It has an equity base of just Rs.8.11 crore that is supported by reserves of around Rs.156 crore. The Promoters hold 57.78% while the investing public holds 42.22% stake in the company. In spite of the lockdown , PGFL has reported stable numbers for Q1FY21 with PAT of Rs.4.36 crore on sales of Rs.64.27 crore with an EPS of Rs.5.37. C...

  After many weeks of hibernation, Bears made a comeback. The first blow was landed on Monday when the Nifty made a very big black body candle which completely engulfed previous six days of upward candle. The week ended on a weak note as Bearish Engulfing pattern got completed on the Weekly timeframe. After several failed attempts by the Bears, formation of Weekly Bearish Engulfing indicates start of the much awaited Correction. There is a possibility of the Nifty testing the 50dma (11096) and 200dma (10808) which are accompanied by higher bottoms at nearby levels. Only a close above Nifty 11794 can negate the Bearish Engulfing Technically Speaking :- Sensex opened the week at 39888, made a high of 40010, low of 38249 and closed the week at 38357. Thus it closed the week with a loss of 1110 points. At the same time the Nifty opened the week at 11777, made a high of 11794, low of 11303 and closed the week at 11333. Thus the Nifty closed the week with a loss of 314 points. On t...

  JM FINANCIAL CMP 83 ENTRY 75 TO 80 STOPLOSS   60 TARGET 130-140 TIME: 12 MONTHS JM Financial is an integrated and diversified financial services group. The Group's primary businesses include (a) Investment banking, wealth management and securities business (IWS) which includes fee and fund based activities for its clients (b) Mortgage Lending which includes both wholesale mortgage lending and retail mortgage lending (home loans, education institutions lending and LAP) (c) Distressed credit which includes the Asset Reconstruction business (d) Asset Management which includes the mutual fund business. As of June 30, 2020, the consolidated loan book stood at ~Rs. 108.3 BN, distressed credit business AUM at ~Rs. 114.4 BN, wealth management AUA at ~Rs. 475.8 BN, mutual fund AAUM at ~Rs. 40.5 BN. The Group is headquartered in Mumbai and has a presence across 456 locations spread across 154 cities in India. It has an equity base of just Rs.95.19 crore that is supported by r...

Financial Ratios Liquidity measures how quickly assets are converted into cash. These ratios are used to evaluate the company's ability to meet short-term obligations without raising external capital. Liquidity ratio affects the credibility of the company as well as the credit rating of the company. It indicates the financial stability of the company.   Some of the commonly used Liquidity Ratios include –   1. Current Ratio 2. Quick Ratio 3. Cash Ratio   Current Ratios: Current ratio is calculated by dividing current assets with current liabilities. This shows the liquidity position, i.e., how equipped is the company in meeting its short term obligations with short-term     assets. A higher figure signals that the company's day-today operations will not get affected by working capital issues. A current ratio of less than one is a matter of concern . Current Ratio = Current Assets / Current Liabilities Sometimes companies find it diff...