We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.

Key takeaways from this chapter

  1. A stock idea can come from any source.
  2. Circle of competence and General observation is a great way to start.
  3. It is advisable to have a watch list that includes stocks that look interesting.
  4. Once a stock is identified, we should look for sustainable moats.
  5. The due diligence process involves understanding the business, running the checklist to understand its financial performance, and the valuation exercise.
  6. When it comes to an understanding the business, one should be completely thorough with its operation.
  7. The checklist should be improvised as and when the investor gains investment experience.
  8. The DCF method is one of the best techniques to identify the intrinsic value of the business


View all comments →
  1. pravin says:

    All your content are very easy to read and understand.great going.
    where do I study more about option based valuation and when can we expect an upload for the same from your side.

  2. pravin says:

    In dcf valuation when there are high capital expenditures (due expansion),the valuation gets reduced .for ex: for acrysil dcf valuation comes to Rs188 but if i remove the capital expenditures the valuation goes up .is it correct that way (idea being the expansion is going to increase the income) or how do we go about it.Also when the cash flow is negative but we know in future the income is gonna increase ,how do we value those stocks.

  3. Amogh says:

    Great explanation! Thanks a lot.

  4. Apurva Patel says:

    Hello I would like to asked for considereding the DCF model the Net debt should be considered of which fiannacial year to be calculated for ex. as you have take the Amara raja batteries example you have taken the debt and cash & cash balance of 2014 year why? please explain this in bit detail

    • Karthik Rangappa says:

      Yes, the immediate previous year is what you are supposed to consider Apurva as the numbers represent the latest financial position of the company.

View all comments →
Post a comment