Revenue & profit
Revenue is money earned from sales before expenses. Profit is what remains after relevant costs and taxes. ₹100 crore revenue minus ₹92 crore total costs means ₹8 crore profit.
INVESTOR LEARNING
Learn the numbers.
Understand the business.
Beginner-friendly definitions for the evidence in a company report.
Your learning map
Start with stocks, exchanges, market cap, SME listings and IPOs. Then learn business results, valuation, financial health, shareholder returns, products and periodic approaches, technical analysis and leverage, and how to audit sources and estimates in a company report.
What to look for: consistent trends, cash-backed profits, manageable obligations, sensible peer comparisons, direct evidence, explicit reported/calculated/estimate labels and risks that can disprove a thesis.
EPS & margins
EPS is profit attributable to each share. ₹100 profit across 20 shares is ₹5 EPS. A margin divides profit by revenue: ₹8 profit on ₹100 revenue is an 8% margin.
Cash flow
Cash flow tracks actual cash movement. Profit can rise while cash flow falls if customers have not paid. Compare operating cash flow with profit over several periods.
Business model & moat
Ask how the company makes money, who pays it and why customers stay. A moat can be brand, cost advantage, network effects, distribution, switching costs or regulation. It should show up in durable margins, retention or market position—not just a claim.
Free cash flow
Free cash flow is cash left after operating costs and the capital spending needed to run the business. It helps fund debt repayment, dividends, buybacks and growth. Compare it with profit over several years, not one quarter.
Share dilution
New shares issued for fundraising, acquisitions or employee plans can reduce each existing owner's share of future profit. Check the trend in shares outstanding alongside total profit and EPS.
P/E ratio
P/E means price-to-earnings—not “profit on equity.” A ₹200 share with ₹10 EPS has a 20× P/E. No universal threshold proves cheap or expensive: compare sector, growth, profit quality, debt and the company’s own history.
Rough illustrations such as below 15×, 15–25×, or above 25× are context prompts only—not trading rules. Banks, utilities, software firms and loss-making companies require different lenses.
P/B & ROE
P/B means price-to-book: it compares share price with book value per share. ROE means return on equity: it is profit divided by shareholder equity. High ROE can reflect a strong business—or heavy leverage—so check debt.
Market capitalization
Share price × shares outstanding. A ₹500 share with 10 crore shares has a ₹5,000 crore market cap. It measures equity market value, not enterprise value.
Debt-to-equity
Total debt divided by shareholder equity. ₹40 debt and ₹100 equity gives 0.4×. Appropriate leverage varies greatly by industry.
Dividends
A dividend is cash paid per share. Annual dividend sums distributions over a year. A ₹4 annual dividend on a ₹100 share is a 4% dividend yield.
Payout ratio
Dividends divided by earnings. ₹4 dividend and ₹10 EPS is a 40% payout. Very high payouts may be less resilient, but sector context matters.
Interest coverage
Interest coverage compares operating earnings with interest expense. Higher coverage generally gives more room if borrowing costs or profits move against the company. Debt maturity dates matter too: debt that must be refinanced soon can create pressure.
Moving averages & RSI
50/200-day averages smooth prices to describe trends. RSI compares recent gains and losses on a 0–100 scale. “Overbought” and “oversold” labels are observations, not forecasts.
MACD, volume & beta
MACD compares fast and slow exponential averages. Volume adds participation context. Beta estimates sensitivity to a market benchmark; it does not capture every risk.
Support & resistance
Prior lows/highs can be labeled as estimated support/resistance. Prices can cross them easily. Always inspect methodology, period and volume.
Diversification & position size
A good company can still be a poor-sized position. Spreading money across businesses, sectors and assets can reduce single-company risk. Decide in advance how much loss, volatility and concentration you can realistically tolerate.
IPO: initial public offering
An IPO is a company's first broad public share offering. Companies may raise growth capital, widen ownership or create liquidity. Primary issuance creates shares and funds the company; an existing-holder sale pays the seller.
Ten million new shares at $10 raises $100 million before costs, but the later market price can be above or below $10. Allocation can be partial, lock-ups may apply, and listing-day volatility can be extreme. Read the prospectus for risks, proceeds, dilution and sellers.
MTF / margin trading facility
Borrowing from a broker to buy shares. Paying ₹40,000 and borrowing ₹60,000 creates ₹100,000 exposure: a 10% fall loses ₹10,000 before interest—25% of your cash. Leverage amplifies losses and adds interest, margin calls and forced-sale risk.
India-specific: MTF implementation, eligible securities, upfront margin and pledge processes follow SEBI/exchange/broker rules; other countries use different margin regimes. Costs and tax treatment vary.
ETF
An exchange-traded fund holds a basket and trades like a share. A broad-index ETF can spread $100 across many companies. Check expense ratio, tracking difference, bid/ask spread, liquidity, structure, currency and tax treatment.
Bonds
A bond is debt: the issuer promises interest and repayment subject to its terms and creditworthiness. A $1,000 5% bond may pay $50 yearly. Prices can fall when rates rise; credit, inflation, liquidity, call and currency risks remain.
Stock SIP / periodic investing
Investing a fixed amount regularly—such as ₹2,000 monthly—can reduce timing pressure but does not prevent loss. “Stock SIP” is usually a broker automation or investing habit, not a separate exchange security. Fees, taxes, concentration and fractional-share availability vary.
Industry / peer P/E
A peer P/E is the typical price-to-earnings multiple for genuinely comparable companies. If a company is 18× and a relevant peer set is 22×, the discount is about 18%. Useful for relative valuation, but peers can differ in growth, margins, debt, geography and accounting quality.
Book value
Assets minus liabilities, usually attributable to shareholders. Book value per share divides that amount by shares. It is useful for asset-heavy firms, but recorded assets can differ greatly from economic value.
Face / par value
The nominal legal value assigned to a share—not its market price or fair value. A ₹1 face-value share can trade at ₹500; the ₹1 is not a valuation signal.
SME companies & listings
Small and medium enterprises are smaller businesses, but definitions and listing regimes vary by country. SME-listed shares can have higher business, governance, liquidity, spread and volatility risk, with lighter disclosure and analyst coverage.
India-specific context: NSE Emerge and BSE SME are separate platforms with eligibility, market-making, lot-size and migration rules. These are not universal global rules; check the relevant exchange and regulator.