ITI Mutual Fund in collaboration

with PAYTM Money

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 Things to understand before investing in
individual stocks

While you are investing in a stock – you are actually

buying a piece of the business

Risk or Permanent Loss of capital happens when you

buy something which you don’t understand

Every company listed on NSE or BSE can be bought or sold

in the stock market. If you are not capable people will sell
shares at high price to you and then you will be a loser

In the market - prices goes up or down and it is up to you

to decide what to buy and when to sell

Investment has to be done with a long term perspective –

5 years and above, so you need to have patience

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 Do your homework on the company before investing in the company’s
stock;

What business they do? Which are the prominent brands?

How the company take care of employees,

Where they do the business?
shareholders, debtors and creditors?

Reputation of the company in the

Who manages the business?
market place?

Whether the company is paying

Who owns the business?
dividends to shareholders?

How long the company can

Market Share
sustain in the business?

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 For whom is this suitable?

Who can spend good time on company research

Able to understand businesses well and foresee the business growth

Willing to study different financial metrics of the companies

Can correlate between companies and apply common sense

Individuals who can ask questions about a company’s stock under consideration –
Why, What, Where, Whom, Which, Who, Why not

Ability to jot down the reasons to invest and see whether it is happening or not

Have patience

Not looking for quick returns because there are no free lunches available in markets

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 What should be your investing universe
and why?

To start with Top There are large, Depending upon your

Nifty50 Index mid and small risk appetite you
Companies which sized companies should choose the
are blue chips in India universe

Large Companies – Less risky

Mid Sized Companies - High risk compared to Large Companies

Small Companies - Very high risk compared to Large Companies

Note: Risk means: Permanent loss of capital 6

 Simple ways to find the right stocks

Companies with
• Good Return on Equity
(i.e., Profit/Net Worth)
• Strong cash generation Company with Good promoter Excellent
Great brands
(i.e., Operating Cashflow
growth) in India great technology group management
• Excellent ROIC
(Return on invested
capital)
• Consistent growth

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 Study few financial metrics and charts :

Price to earnings per share Return on Equity (ROE)

(P/E) – Lower the better – Higher the better Beta – Lower the better

Price to Book value per share Sales Growth – Historical Price Trend
(P/BV) – Lower the better Higher the better

Debt to Equity (D/E) Operating Cashflow growth Historical Profits Trend

– Lower the better – Higher the better

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 Some Do’s and Don’ts while
investing in stocks
Don’t put your hard earned money in stocks
unless you have studied it by yourselves
Don’t sell a stock if the company is growing
and cash flows are increasing
Don’t let emotions impact your investments
Invest only your surplus funds and avoid
borrowed money
Investing is a serious profession, so if you can’t
dedicate time for research, it is better to invest in
mutual funds with a long term mindset.
Avoid herd mentality : Don’t buy based on others tips
Never worry about volatility i.e., Markets always
moves ups and downs & so the stocks
Avoid expensive stocks or stock which has run up
quite sharply in the recent times
Avoid buying a stock when the business is not
doing well
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 Summary of Today’s Learning

Things to understand before Do your homework on the company

investing in individual stocks before investing in company's stock

Understand whether you are What should be your investing

capable of doing it on your own universe and why

Simple ways to find your right Study few financial metrics and
stocks charts

Some do’s and don’ts while

investing in stocks

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Disclaimer
This write up is for information purposes only and is not an offer to sell or a solicitation to buy any mutual fund
units/securities. This information alone is not sufficient and shouldn’t be used for the development or implementation of
an investment strategy. It should not be construed as investment advice to any party.
The data used in this material is obtained by ITI Asset Management Limited (ITIAML) from the sources which it considers
reliable. While utmost care has been exercised while preparing this document, ITIAML does not warrant the completeness
or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information.
The content of this note is confidential and intended solely for the use of the addressee. If you are not the addressee, or
the person responsible for delivering it to the addressee, any disclosure, copying, distribution or any action taken or
omitted to be taken in reliance on it is prohibited and may be unlawful. The recipient(s) before acting on any information
should make his/their own investigation and seek appropriate professional advice.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Thank You

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