13 Key Factors to Check Before Buying a Stock

What to do before buying shares. What to keep in mind while buying shares What are the things to keep in mind while investing in shares? Important key factors to check before buying a stock | What should we check before buying stocks

Every investor who invests money in the stock market , once in the mind of every investor, what should be done before buying a good strong stock?

यह एक ऐसा समय है जब लंबी अवधि का निवेश करना चाहिए। यदि आपके पास लंबी अवधि के लिए अतिरिक्त नकदी है, तो इक्विटी आपके लिए है। पर आपने कैसे किया? आप उन्हें कैसे चुनते हैं? लंबी अवधि के लिए शेयर खरीदते समय आपको किन महत्वपूर्ण बातों का ध्यान रखना चाहिए?

What are the factors that you should look at before buying a stock?

Because while buying any stock, it is not enough just to see its share price but also to know other things about that company.

कुछ प्रमुख चीजें हैं जिन पर हम आज नज़र डालेंगे, ये प्रमुख अनुपात हैं जिन पर एसएस ग्रेवाल और नवजोत ग्रेवाल द्वारा शेयरों में लाभदायक निवेश की चर्चा की गई है।

लेकिन, उन्हें पढ़ने से पहले यह समझ लें कि वे अनुपात हैं जो शेयर की संभावनाओं का अच्छा संकेत हैं और लंबी अवधि में शेयर की कीमतों में वृद्धि की गारंटी नहीं हैं, शेयर बाजार हमेशा भावनाओं और परिप्रेक्ष्य पर चलते हैं जो कभी भी बदल सकते हैं

So that your money is invested in a safe company.

What should be done before buying shares?

As I always tell you before buying any stock, you are not only investing in shares but investing in a company that does some business through shares.

This means that your money will increase only when the business of the company grows.

करों सहित सभी खर्चों में कटौती के बाद, कंपनी के शुद्ध लाभ को दो भागों में विभाजित किया जाता है – लाभांश और हलवापसी।

लाभांश कंपनी के मुनाफे का वह हिस्सा है जो उसके शेयरधारकों को वितरित किया जाता है, जबकि प्लॉबैक वह हिस्सा होता है जिसे कंपनी अपने पास रखती है और अपने भंडार में जुड़ जाती है।

किसी भी कंपनी के प्लाउबैक और रिजर्व के आंकड़े उसकी बैलेंस शीट और लाभ और हानि खाते पर एक सरसरी नज़र से प्राप्त किए जा सकते हैं।

Remember, I am not talking about traders here but investors because people who trade in the stock market have to do technical analysis and not fundamental analysis before investing in any stock.

So if you are a trader and want to earn money by doing intraday trading or swing trading only then you need to learn the chart patterns and technical analysis of the stock.

जब आप निवेश के उद्देश्य से स्टॉक खरीदने का फैसला करते हैं, तो अपना होमवर्क करना महत्वपूर्ण है क्योंकि आप अपनी मेहनत की कमाई को इसमें निवेश कर रहे हैं। आपका लक्ष्य अच्छा मूल्य प्राप्त करना होना चाहिए, खासकर जब आप लंबी अवधि के लिए स्टॉक खरीद रहे हों।

लेकिन इससे पहले कि आप किसी कंपनी में अपना पूरा विश्वास रखें, आपको पूरी तरह से शोध करना चाहिए, स्टॉक के मूल सिद्धांतों का विश्लेषण करना चाहिए और यह जांचना चाहिए कि स्टॉक खरीदने से पहले यह स्टॉक आपके पोर्टफोलियो में फिट बैठता है या नहीं।

आप केवल एक स्टॉक नहीं खरीद रहे हैं बल्कि आप उस कंपनी के शेयरधारक बन रहे हैं, इसलिए एक निवेशक के रूप में आपको उचित विश्लेषण करना चाहिए।

What to keep in mind while buying shares?

This checklist will tell you which factors you should look at before buying any stock, so let’s know all the points one by one.

1. Try to understand the business model of the company

Business model means how the company makes money. Before investing money in any stock, you must know its business model because when the company launches any new product or service in the market, then its share price goes up and down.

And at that time you do not understand why this is happening but if you know the business model of the company then you will not be surprised.

सबसे पहले, आपको स्टॉक खरीदने से पहले समय सीमा तय करने की आवश्यकता है क्योंकि यह तय करने में महत्वपूर्ण भूमिका निभाता है कि उस स्टॉक को खरीदना है या नहीं। आपके वित्तीय लक्ष्यों के आधार पर आपके निवेश का समय अल्पावधि, मध्य अवधि या दीर्घकालिक हो सकता है।

  • शॉर्ट टर्म- एक शॉर्ट टर्म समय क्षितिज कोई भी निवेश है जिसे आप एक वर्ष के लिए या उससे कम समय के लिए रखने की योजना बना रहे हैं। यदि आप किसी शेयर को खरीदने और उसे एक वर्ष से कम समय के लिए रखने की योजना बना रहे हैं, तो स्थिर ब्लू-चिप शेयरों में निवेश करना सबसे अच्छा है जो लाभांश का भुगतान करते हैं। कंपनियों की बैलेंस शीट अच्छी होती है और इसमें जोखिम भी कम होता है।
  • मध्यम अवधि- एक मध्यम अवधि का निवेश एक ऐसा निवेश है जिसे आप एक वर्ष से 10 वर्ष तक रखना चाहते हैं। मध्यम अवधि के निवेश के लिए किसी को गुणवत्ता वाले उभरते बाजारों के शेयरों और मध्यम स्तर के जोखिम वाले शेयरों में निवेश करना चाहिए।
  • लंबी अवधि- अंत में, दीर्घकालिक निवेश कोई भी निवेश है जिसे आप 10 से अधिक वर्षों तक रखने की योजना बना रहे हैं। इन निवेशों में कुछ गलत होने पर ठीक होने का समय होता है और यह एक महत्वपूर्ण रिटर्न उत्पन्न कर सकता है।

Apart from this, when the company declares its quarterly results every 3 months, then sales and revenue are told in it and on the basis of that the investors decide to buy and sell the shares.

But at the same time you should try to find out some important things about not only Asian Paints but also before buying the stock of each and every company.

  1. What other products does this company sell?
  2. Which product has the highest margin?
  3. Which product is number one in that industry?
  4. Which policies of the government can affect the company (you will know this by looking at the past history and records of the company )
  5. How is the company’s growth in comparison to its competitors?
  6. Is she able to do business in a consistent manner?
  7. What are the difficulties faced by the company in launching a new product?
  8. Do you have shares of the company you bought?
  9. Business Models Another Company Can Copy?
  10. Which is the number one company in the sector and why?

2. The debt on the company should not be high

If you do a little search on Google, then you will find examples of many such companies who took a lot of debt and due to non-payment, it sank and investors’ money was also sunk.

People who invest money in such companies on which debt is very high, they put themselves at risk.

But is taking on debt a bad thing for a company?

3. View Balance Sheet and Financial Health Fundamentals

By reading the fundamentals and balance sheet of the company, you get to know about its financial health.

In the balance sheet, you get to know how much cash is with the company, as well as the information about how many assets and liabilities the company has is also given in the balance sheet.

4. Check how old the company is

The older the company, the more experience it will have. For example, if you invest in the shares of any company of Bajaj Group or Tata Group, then the chances of earning good returns will be very high.

This is because Tata and Bajaj Group have a very long experience in the market during which they have seen many ups and downs and learned from them.

Whereas a new company may not have faced a lot of troubles due to which it has less experience of running the business.

5. Don’t invest in stocks that look circuitous

If you invest in the stock market then you must have known about the circuit.

Generally, there is an upper circuit or lower circuit of 5%, 10%, 15% or 20% in a stock, but it is not used in all stocks but mostly in penny stocks .

This is because small or cheap stock can be easily manipulated by any big investor, that means by investing a lot of money in it all at once, it can suddenly accelerate.

Thus small retail investors will feel that their share price is increasing then they should also invest money and thus many newcomers become victims of such operator stocks.

And 1 point comes when the operator i.e. the one who had invested the money in the beginning sees that the price of his share has increased a lot, then he sells all the shares he has bought in one go.

Now since he had the highest number of shares and the company was very small, that stock starts getting lower circuited.

The point to be noted here is that if there was no circuit process in that stock, the price of that stock could go down by 500%, 1000% or even more in a single day due to the operator’s sudden sell-off and that’s why It is very important to have a circuit in small stocks.

  • Another example of this is cryptocurrencies that do not involve circuitry and therefore their price moves up or down by more than 1000% in a single day.

6. Must see the necessary financial ratios of the company

While doing fundamental research of a stock, we have to look at a lot of financial ratios like:

  • PE Ratio (Price to earning ratio)
  • PB Ratio (Price to book value ratio)
  • Debt to Equity Ratio
  • Earning per share
  • Book value per share

Apart from these, there are many ratios which you should look for while doing financial analysis. If you look at all these financial ratios before buying the stock, then you will know how the financial position of the company is.

7. Have a Look at Management

Management analysis of the company is an important step before buying shares. You should gather as much information as possible about the promoters and CEO of the company so that you can know how capable the top people of the company are.

such as-

  • If you talk about Narayanmurthy , the owner of Infosys , his personality is known to everyone that he is a capable businessman.
  • Similarly, people have a similar opinion about the founder of Wipro, Azim Premji.
  • Similarly, if Mukesh Ambani lists a new company in the stock market, then there is no need to do management analysis because Ambani is already trusted by everyone.

But if there is a company whose management you do not know about, then you should take maximum information about them because it is the same people who make any business successful or ruin it.

It has happened many times in fast that the fundamentals, balance sheet and financial ratio of the company were very good, seeing that people started investing money in those companies but did not pay attention to the management and after some time these companies ran away with money. .

Which happened due to lack of attention to management, for example you can read about “ Satyam scam ”.

8. Compare the Sector and Appoint Business of that company

You should know a little bit about the industry in which the company operates.

  • Which is the leader company of the sector?
  • Which company has the strongest share in that industry?
  • Does the company have any competition advantage that other companies cannot apply for?

For example; Hindustan Unilever’s distribution network is its competition advantage because no FMCG company has a distribution network as large as HUL and that is why today Hindustan Unilever has thousands of products.

Because if any new company wants to take its product to every nook and corner of the village, then it will need to set up a huge distribution network whereas Hindustan Unilever already has it, so that new company should give its product to Hindustan Unilever only. Would like so that he can reach every nook and corner of the country.

And thus no one can break this competition advantage of Hindustan Unilever.

  • Similarly, IRCTC has a monopoly in Indian Railways, that is, the government has allowed only IRCTC to provide railway service, meaning there is no other company in their competition.

Similarly, Bajaj Finance has their data only Competition Advantage i.e. Moat which no other company has and this is the reason why Bajaj Finance has given the highest returns in India as compared to other strong companies.

That is why before buying any share, you must check in that company whether it has any such competition advantage or protection which other company cannot apply.

If yes then that company can show good growth in future. That is why while investing in shares, make sure to compare the sector and the constituents of the company.

9. Invest only in innovative and growth companies

There are many such instances in which some businesses were such that they were doing very well in the beginning but they drowned on seeing it.

And the only reason for their failure or sinking was the lack of innovation.

For example;

  • Kodak cameras also failed because they did not adopt new technology along with the times.
  • Chetak’s scooter, which was covered in the entire market at this time, has no trace of it anywhere.
  • Whereas Hero Scooty survived because he innovated over time.
  • The company that made the Atlas cycle is nowhere to be seen today because it could not do innovation in time.
  • The HMT watch which used to be at the forefront is today replaced by Titan in which Rakesh Jhunjhunwala has invested the most.

Warren Buffet has also bought the share of Apple company because this company keeps on making new innovations from time to time, due to which their growth never stops.

10. Find out about future plans

When you keep an eye on the future plans of the company, you get to know about its potential.

For example ;

  • Had Tata Motor Company not given priority to electric vehicles, its share price might not have gone up.

Because you also know that electric vehicles are going to grow a lot in the future and the companies which are working in their production have a good eye on them by the investors.

Similarly, Tata Power’s stock also rose when the craze for renewable energy and solar power increased.

That is why if you invest in a stock looking at the future, then you will definitely get good returns.

So if you want to know the potential of a company, then keep an eye on its future plans, that means before buying any stock, definitely take a look at its future plans.

11. Must Check Share Holding Pattern

You must know what is shareholding, that means which shareholders have invested money in a share, it is called shareholding.

In a good strong stock, the maximum shareholding should be of the promoters of the company.

I believe that at least 40% of the shareholding should be of the promoters but it should be more than that.

Apart from this, before buying a subject, you should also check the holding of mutual funds ie DII (Domestic Institutional Investor) in it.

At the same time, if foreign investors have also invested in that stock, then it is even better.

  • This means to say that if the promoter’s holding in the company is more, then people will have more trust in that company because the maximum number of shares are with those people who are running the business.

But if the promoters of the company are reducing their shareholding or selling the shares, then there is no trust in their own company.

Meaning when the promoters start selling the shares of their company themselves, then understand that something is wrong and get out of that share immediately.

  • If the money of mutual funds and foreign investors is invested in the company, then it is a good sign for the growth of the share because if they show some potential in the business, then only big institutional investors have invested their money in that company.

Therefore, before buying any share, definitely check the share holding pattern.

12. View Company Size

You know that the size of the company is determined by its market cap.

  • If the company is smaller than 1000 crores or 500 crores then it will be called micro cap.
  • If it is bigger than 1000 crores then small cap and if it is bigger than 30000 or 50000 crores then mid cap company will be spoken.
  • But if its size is more than 1 lakh crore then it comes in the category of large cap company like; Reliance, Dmart, TCS, Asian Paint (Nifty 50 companies) etc.

The smaller the company, the higher the risk.

Remember, during both the ups and downs in the market, the shares of most small small cap companies run and fall.

There are some small companies that are completely destroyed when the stock market falls.

Whereas, on the contrary, some penny stocks give a lot of profit in a very short period of time and only after that they come in limelight means they become popular.

That is why before investing money in any stock, definitely see the market capitalization of the company i.e. how big is the company.

13. Take a Look at Dividend History

Not every company listed in the stock market gives dividend, only a few companies pay.

Dividend is the money that companies distribute to their shareholders out of a portion of their profits.

What do you think the salary of the month of Mukesh Ambani will be.

The answer is only two to three crores.

Now the question comes that despite having such a low salary, how is he the richest person in India?

The answer is dividend .

  • You all know that most of the equity of Reliance Industries is with Mukesh Ambani, which gives him an income of more than 1000 crores every month in the form of dividend.

So today you also learned that any senior person is not only bigger than his salary but he is bigger than the dividend.

If you want to read a detailed post about dividend then definitely tell in the comment box.

But now the question comes whether you should invest in dividend paying companies or non dividend paying companies.

  • Because a big company like Google does not give dividend because it wants to invest all its money in the growth of the company, then the profit you earn as dividend will earn many times more than the growth of share price and this is the thinking of big companies. .

That is why you must have seen that some big successful companies do not give dividend.

Whereas at the same time some companies which give a lot of dividend, their share price does not grow at all like ITC, Coal India, BPCL etc.

Therefore, if you want to invest in dividend paying companies, then keep an eye on its growth and also check its dividend history as well.

What are the things to keep in mind before investing in shares?

If you follow all the things that I have told in this post, then you will definitely be able to buy a good strong, even if its size is small, but it will earn so much return on your money that shares of big companies. Can’t give

The only condition is that you have followed the above mentioned check list properly.

What should be kept in mind before buying shares?

Factors to consider when buying shares of a company You have understood that before investing money in a share, you need to take care of some points, which I have explained in detail above.

But here I am going to tell you in short why it is important for you to read the above checklist.

What will this check list tell you?

  • This check list will tell you how much potential a company has and how much growth it can show in the future.
  • By understanding the business model of the company, you will not be afraid of the fluctuations in the share price in the short term, but if you have faith in the business of the company, then you will buy more if the share price is low.
  • From the shareholding pattern, you will know that how much the promoters of the company have trust in their company and by doing management analysis you will get to know what the promoters of the company have about their company. .
  • Dividend history will tell you how many times the company has paid dividends since inception and how much.
  • Keeping an eye on the future plans gives you an idea about the future potential of the company.
  • Comparing Sectors and Appointments gives you an idea of ​​whether any other company can copy or surpass the business model of the company you have invested in.
  • The meaning of seeing an innovative company is that from time to time they bring new innovations so that they can always be updated with the changes taking place in the market because you also know how fast the technology is changing and the companies which They change themselves with time, they are able to survive in the market in the long run.

FAQs (What to do before buying shares)

What to do before investing money in a stock?

Before investing money in any stock, you have to see a lot of things like what the company does, how are its fundamentals, how fast is it growing, how many times has investors’ money grown in the last few years and many more. There are many things that you should look at before buying a stock.

What are the things to keep in mind while investing in shares?

Before buying the stock you are investing in, prepare yourself a proper check list, in which include some 10 to 12 points and follow it before buying every single share, you should also follow the checklist given in this post. can follow.

Which stock should I buy which will give good profit in future?

If you want to buy a stock that will turn out to be a multibagger stock in the future and make your investors rich, then you should keep an eye on the future potential of the company as much as possible and buy the stock when it is at a very low price. (ie at intrinsic value ).

What are the factors to keep in mind before buying shares?

If you ask me, whenever I buy any stock, I follow all the above points which make good profit in the long term on my purchased stocks, and I also recommend you to keep these factors from buying shares. I recommend keeping that in mind first.

Conclusion (What to do before buying a share)

In this post I have tried to tell you in detail that what should be done before buying a good fundamentally strong stock?

I guarantee that if you follow the above checklist, you will definitely be able to find golden fish from such a vast sea of ​​stock market.

Meaning you will be able to find such a multibagger High Returning stock which will become future multibagger and make you a rich investor.

That’s why I am saying that by following the above check list, you will also be able to invest in shares when the company is very small because then you can already see its potential if you follow all the points properly.