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Investing Framework

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  • Investing Framework

We look for 3 things to identify apotential multi-bagger stock

Sales Growth

The company should have consistent and high sales growth

Margin Expansion

There should be scope for margin expansion as the business scales up

Re-rating of Valuations

The valuations should get re-rated as the business performs and as the stock gets identified by the larger investor community

We divide our Fundamental Analysis into 3 parts

1. Study of Business & Promoters

  • Are the promoters honest?
  • Do they have the required knowledge and experience?
  • Do they have a fire in their belly to take the business to greater height?
  • Does the business have a strong MOAT?
  • What is the total addressable market size and scalability in the business?
  • How is the competitive intensity?
  • What are the risks?
  • Is there an element of cyclicality?
  • What are the growth prospects?

2. Study of Financials

  • How has been the historic growth in sales and margins?
  • What is the present capacity and capex plans?
  • How is the company managing the debt?
  • Is the management efficiently managing working capital?
  • Is it a free cash flow generating company?

3. Study of Valuations

  • We make projections for the revenue and profits for the next 2-3 years based on the guidance given by the management
  • We assign suitable earnings multiple based on the historic average and the peers in the same industry
  • Based on the above we arrive at projected market capitalization of the company and compare it with the present to take a decision
  • We also consider other aspects like Price to Book Value, Market Cap to Sales, EV/ EBITDA etc
  • When we like a stock fundamentally, then we do the Technical Analysis to decide the entry and exit points of the stock
  • Varun Agarwal (Proprietor of Networthy Financial Services) is a SEBI Registered Research Analyst.
  • SEBI Registration No. INH000014474
  • Registration Type: Individual
  • Validity:
  • BASL Membership Number:
  • Principal/ Compliance Officer: Varun Agarwal
  • +91 888 546 5461
  • cavarunagl@gmail.com

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