S2 E4 : FUNDAMENTAL ANALYSIS : THE HEART OF INVESTING.
🎭 Imagine This:
You're planning to buy a second-hand bike.
Will you just believe the seller blindly?
Nope!
You’ll check:
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How old is the bike?
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What’s the mileage?
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Has it met with any accident?
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Does it run smoothly?
This is exactly what fundamental analysis is — but for a company.
It’s checking the health, strength, and future potential of a company before buying its shares.
🧠 What is Fundamental Analysis?
It means studying the real business behind a stock.
You're not buying a magic paper.
You're buying a piece of a real company — like Tata, Infosys, or HDFC.
You need to know:
- What the company does
- How much profit it makes
- How much debt it has
- How fast it's growing
- Whether people trust the brand
🧰 The 3 Pillars of Fundamental Analysis
Let’s break it into 3 simple steps:
1️⃣ Company Analysis – What Do They Actually Do?
Ask:
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What is the business?
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Is it a growing industry?
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Who are their competitors?
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Are they a leader or follower?
🧠 Example:
Infosys is in IT services.
It serves global clients like banks and tech firms.
IT is growing fast = Good sign.
2️⃣ Financial Analysis – Is the Company Making Good Money?
Check these basics:
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Revenue – Total money they make
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Profit – What’s left after expenses
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Debt – Do they owe too much?
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EPS (Earnings per Share) – Profit per share
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ROE (Return on Equity) – Is it using money efficiently?
🧠 Example:
HDFC Bank has:
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Steady profits
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Low bad loans
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High ROE
✅ Healthy!
3️⃣ Management & Trust – Who Runs the Company?
Even a great business can fail with bad people.
Ask:
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Who are the leaders?
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Are they honest and experienced?
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Any fraud or scam history?
🧠 Example:
Tata Group is respected for clean management.
That builds investor trust.
🧠 Real-Life Example: Checking Reliance
Let’s say you want to invest in Reliance Industries.
You’d check:
✅ What they do → Energy, Jio, Retail, etc.
✅ Revenue and Profit → Growing every year
✅ Debt → They reduced it after Jio investments
✅ Leader → Mukesh Ambani, strong business history
✅ Industry → Digital + Energy = Future ready
That’s fundamental analysis!
📊 Why It Matters:
Without it, you’re just guessing.
With it, you’re thinking like a business owner.
You stop following tips.
You start trusting your own research.
🧠 Recap (Like Homework but Smarter)
✅ Fundamental Analysis = Studying the real company
✅ Look at: Business, Financials, and Management
✅ Ask: What they do, how much they earn, who runs it
✅ Helps you find strong, long-term investments
✅ Warren Buffett made billions using this method