Revenue Questions

wealthymattersThis post is in continuation of these 2:Link.Link.

This post is on how to analyse the key revenue constituents of a profit and loss statement (P&L).

Some companies report the ‘total income’ earned by them within a year as ‘sales’. As an investor,its better for us if we take a company’s integral earnings or core operations only as sales and not the income that is generated from other operations. The latter could include items such income from sale of scrap, income from interest and dividends, forex gains, profit on sale of assets, export incentives and miscellaneous receipts, amongst others.While these items may not be a significant part of the total income, it is still a good practice to follow. In fact, it would be even better if we could further bifurcate such earnings under two heads – other operating income and other income. Details regarding total income are found in respective schedules.

Revenues are generated from sales of goods or services. For companies which have a presence in various businesses, it is a good practice idea to track the change in segment wise/ product wise / business wise revenues on a year on year basis. Look at how the income from each business segment (as a percentage of net sales) has changed over the years. This will give us a good idea how a company’s segments or businesses have been performing over a particular time frame. Read more of this post

Rakesh Jhunjhunwala Quote-2

wealthymatters “The market is like women, always commanding, always mysterious, always volatile, always exciting, and it is not a joke. In my 25-30 years of experience in the market, just as you cannot have a good relationship with a woman by bullying her, you cannot have a good relationship with the market by trying to bully it or say that you are the king. The king is the market.”

Rakesh Jhunjhunwala Quote-1

Stock investing, like cooking, cannot be taught, it has to be learned.

Rakesh Jhunjhunwala’s Ten Commandments For Investing

wealthymatters1.Be an optimist! The necessary quality for investing success.

2.Expect a realistic return.Balance fear and greed.

3.Caveat emptor. Never forget this four letter word-R-I-S-K.

4.Invest on broad parameters and the larger picture.Make it an act of wisdom not intelligence.

5.Be disciplined.Have a game plan.

6.Be flexible.For investing is always in the realms of possibilities.

7. Contrarian investing.Not a rule,not ruled out.

8.Its important what you buy.Its more important at what price you buy.

9.Have conviction.Be patient.Your patience may be tested,but your conviction will be rewarded.

10.Make exit an independent decision.not driven by profit or loss.


Stocks To Capture Rural Prosperity

wealthymattersA short drive out of our cities will show you that prosperity and modernity are reaching our villages too.If you wish to benefit by this increase in prosperity in rural areas you could accumulate the stocks of the following companies:

1. Hero Motocorp : Hero is the strongest 2 wheeler brand in rural areas and has 5000 distribution points in rural India,the highest in the industry,It derives nearly half of its sales from rural areas.

2. Emami : In the consumer industry,Emami has one of the highest exposures to rural markets.Around 60% of its sales and 50% of its profits come from here.

3. Maruti :1/3rd of its sales comes from rural areas where it has a strong brand and network.

4. Mahindra & Mahindra : The farm equipment segment (tractors) represents 40% of the topline.

5. M&M Fin Services : One of the largest vehicle finance companies,M&M Financial Services focuses on the rural and semi-rural areas with a majority of its 675 branches being located in such areas.A rise in rural incomes leads to greater demand for tractors and passanger vehicles.

6. ITC : The company makes 35-49% of its sales from the rural market.It is witnessing the rural consumers moving up the value chain in cigarette category.

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