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FUNDAMENTAL ANALYSIS made easy | Stock Market for beginners - YouTube
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hi everyone welcome to today's video so
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let me start today's video by
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asking you a very simple question the
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question is
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why do you think that banks or the
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banking sector is bailed out
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when any major crisis happens for
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example in 2008 when financial crisis
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happened it is called as financial
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crisis
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because there was massive faults and the
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banks end
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for example there were investment banks
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like jp morgan goldman sachs which
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did some really bad stuff right i'll
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make a separate video on it but we all
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know that these banks performed really
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badly they
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engaged in really shady activities they
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suffered massive losses their valuations
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went down but still the us government
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jumped in
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and bailed them out right similarly in
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india there have been numerous instances
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when the government jumps in and bails
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out failing banks
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so why is it that several sectors be it
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power b transmission be it
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auto be it chemicals government let
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these sectors fail but on the other hand
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banks why is it that government needs to
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save banks
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so please type out your response in the
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comment section i will give the answer
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towards the end of this video
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let me move on to the agenda of today's
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video so today i am going to talk about
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equitas holding this is one of the key
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stocks that i hold in my portfolio
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and this stock has given me
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approximately 90 percent return
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in less than a year and i have been very
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confident about this talk and have
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poured in
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a lot of capital as you can see from
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this chart so please listen to this
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video there are very important lessons
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that i would like to share with you
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about fundamentally analyzing a stock
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and why
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i have been super bullish on small
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finance bank
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and whether or not you should also start
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investing your money in small finance
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bank
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in this bull run okay so please stay
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till the end of the video
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very very important i am going to speak
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in five points that's it i will not
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complicate anything
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even if you are a beginner you will get
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it but please stay till the end of the
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video otherwise you will understand half
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the things and then you will execute
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half the analysis
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so i will show you how i do fundamental
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analysis and i use a tool called a
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sticker tape i absolutely love the
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product
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therefore they are the knowledge partner
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of this video and i will show you how i
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have been using ticker tape to my
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advantage to conduct fundamental
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analysis
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also would request you to please check
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the description box so
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point one is that whenever you are
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looking to do fundamental analysis of
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any stock you need to understand the
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fundamentals
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fundamentals of different industries
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right different industries
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and then pick the best industry out of
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it where you want to pour in your money
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or a set of three four best industries
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so many of my regular viewers might be
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aware that i have been super bullish
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on which industry on small finance bank
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industry
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right so this is the industry that i am
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trying to analyze and learn more about
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so what i would do here very simple that
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i would look at
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what are some of the small finance banks
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in india for example there is even small
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finance bank
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right bajaj finance can also qualify as
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small finance bank so to say
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right because they do small financing
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not technically a bank per se
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right then there is equitas holding and
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bunch of other different banks right so
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equitas holding
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the stock that i am going to talk about
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today even before jumping into these
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talks i would do a thorough research on
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what small finance bank is what is its
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scope
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and i will try to do this analysis so
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whenever i am trying to do a fundamental
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analysis of any type of industry what i
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would do is that i would go on the
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website of these two three big players
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and i will try to read all the financial
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information and any key points that they
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have covered on their annual reports
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so let me show you some of the key
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points from there
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so here i am at the equitas website
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right and all these websites do present
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their annual reports right
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so you can literally go scroll down and
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then you can
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look at the equitas holding limited
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annual report so let's
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read the latest ones right now what am i
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trying to do here i'm not trying to go
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through the company fundamentals i'll do
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that separately
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but i'm just trying to get a feel of the
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industry so there were a couple of
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really good points that i could
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decipher here which i just wanted to
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point out and why i have been so bullish
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on this industry now if you go to page
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23 of this report you will read
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something very interesting
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right it gives an overview of the small
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finance bank industry right
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so it says that hey literally like small
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finance bank industry in the last three
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years so 2016 is when
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small finance bank 2015 2016 was the
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year when
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rbi started pushing small finance banks
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and they started making a lot of inroads
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so look at the growth
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of these banks so asset under management
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grew at a compounded annual growth rate
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of 26
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right this is 26 growth
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per year this is a massive growth number
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for any kind of industry
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so and this is a fact that is available
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that has been available since 2016 2017
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that every year the industry has been
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growing at a massive pace right so this
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is a very very important point for you
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to observe that this industry has a
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massive growth rate it has been growing
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at a massive pace
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so this is the first key point that you
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need to understand that hey which
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industry should i
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pick my bets on so i am picking my bids
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on small finance bank industry ev
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industry this is another industry that i
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have been very bullish about i linked
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the video here why
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right but these are some of the
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industries that i have been very bullish
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about right so this is the present
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trend of this industry right present or
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historic trend
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right lot of times what we do is that we
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look at the present trend
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we look at the historic trend and we are
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done no that is a very wrong habit
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you need to move on to step two you need
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to understand that hey what will the
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future trends look because that will
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dictate
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from where the stocks of these
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industries will shoot up to right so
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here there is very good data given right
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again on the annual report you do not
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need to do anything
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so all you need to do is that you just
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need to look at some of the factors that
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are driving the growth of small finance
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back industry
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and use your brain as to heal do these
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things look reasonable so let us go
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point by point
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so lack of formal banking services for a
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significant section of india's
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population this is absolutely true
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now if you are from a tier 3 city or if
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you are from a tier 3 town or a small
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village
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you will understand that banking and
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getting credit is a massive pain for
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rural people
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majority of the times what are the
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options for villagers what they do
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they go to loan charis right they charge
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like 50 monthly returns right on their
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capital which is very unfortunate and
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people get trapped
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this happens because many poor people do
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not have access to banking and financing
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now very recently right i mean literally
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in the last five or six years
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janthan accounts have been opened right
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bunch of other verification has been
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done why was it done
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to get more and more people into the
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formal banking system so this exercise
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has not been completed yet right this
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exercise has not been completed yet
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it will continue to happen so this point
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looks very valid right
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second unorganized to organize banking
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this is what it means that rather than
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people going to loan charts people will
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now move to organized banking right
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there will be formal banks like would
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you even small finance bank
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equitas holding equidas also has a small
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finance bank equitas holding is the
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holding company it holds
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equita small finance bank so yes this is
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also happening
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access to funds at cheaper cost
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absolutely again ties into the first
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point that i was saying that if i am
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someone who is living in a village
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then rather than taking expensive loans
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from loan shark where will i go i will
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go to these small finance banks micro
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finance institutes
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right so that is what is happening right
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and this is again a trend very clearly i
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actually worked on one of the micro
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finance institute projects during my
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time at dahlberg so i have good
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understanding about this industry
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so from that perspective i was quite
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bullish from this
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angle right now bunch of other different
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supporting factors so i'll let you read
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it there is another good information
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that is given here so you can read it
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right
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so this is very very clear that you know
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what if
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you use your brain and if you try to do
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a future prognosis right future
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prognosis
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you will understand that okay or not
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things look fine there will be growth in
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this industry
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this is the second key point that i
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wanted to delve deeper
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number one look at the past trends look
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at the present trends
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number two look at the future trends
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right at least this trend based analysis
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should be very clear to you and it
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should be clear to the point and you
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should believe in that analysis
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because when the stock prices go down
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you will not sell it if you truly
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believe that you know what i have
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purchased the stock
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keeping a long term vision in mind
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you'll be super happy this is what long
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term investing means
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it is super boring you have to do a lot
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of research but this is the way to do
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fundamental analysis and i am showing
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you literally opening
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it up very very transparently what
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fundamental analysis actually means
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right please give it a thumbs up it
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would mean a lot to me
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so okay moving on to the third point
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point number three now we have to decide
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which stock
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or which stocks do i need to buy
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from that industry right so here the
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question would have been that hey except
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why did you choose
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only equitas finance why not something
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else right so let me
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now take you to tickertape and this is
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the analysis that i do and this is the
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feature that i love about ticker tape
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that you can literally do a peer
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comparison so what do you see
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right you see something called as p e
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ratio right pe ratio means what
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price to earning right now for a company
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like bajaj finance we all know that
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bajaj finance stock is massive it has
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become a rocket in the last 10 15 years
[536]
it has given massive returns now
[538]
essentially price to earning indicates
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what so price to earning means that hey
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you have to put in five rupees
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to make one rupee right if the price to
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earning is let's say eight then you have
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to put in eight rupees to make one rupee
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right so now this is the first
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interpretation of price to earning this
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is what all the analysts will tell you
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and which is cool
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but there is another way you can look at
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price to earning ratio
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what it simply means is that hey you
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look at price to earning and if a
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company is commanding very high price to
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earning
[566]
right very high price to earning for
[568]
example bajaj finance
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it indicates that people are betting
[572]
very high on its growth rate
[574]
right so essentially price to earning
[576]
also indicates growth rate so companies
[578]
that have a very high price to earning
[580]
people are believing that hey this is a
[582]
very high growth company already
[584]
right for example if you put your money
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in bajaj finance right now
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it's price to equity or price to earning
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is 83.63
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now this price to earning ratio will not
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become like 500 right that is highly
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unlikely right such growth does not
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happen
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but if you are putting your money on a
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small company
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or a company where the price to earning
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ratio is 9.23 can it become 85 yes it
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can right
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for that the company will have to become
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eight times nine
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nine nines eighty one so it has to
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become nine times right now
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if the company becomes nine times to get
[615]
to bajaj finance it can technically do
[618]
that this indicates that you know if i
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am putting one rupee i will essentially
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make nine rupees
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right from that stock right this is a
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very different way of looking at price
[627]
learning i am telling you this technique
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because this is a technique not what
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many people think about right this is
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not very easy to understand this has a
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lot of numbers so i will
[635]
request you to rewind and watch this
[637]
part again but essentially what i am
[639]
getting at is
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so some companies where the price to
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earning is low right now
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it does not indicate that hey this
[644]
company is bad right
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it just simply could mean that hey there
[648]
is a massive buying opportunity
[652]
right there might be a massive buying
[654]
opportunity in this stock
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so now how do you decide right because
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you can interpret this
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low price to earning ratio in two ways
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right you might say that here or not
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bajaj finance is 83.63 people are
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betting on its growth
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here people are not even betting on its
[668]
growth right therefore it's 9.23 so
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probably it's a bad share to buy
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okay so let me now take you to
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fundamentals of the company or the
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financial analysis of the company
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because you need to take a look at the
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finance and how much revenues
[681]
is the company making so you need to see
[683]
price to earning ratio
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in context to the financials is it a
[686]
growing company or not why
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because price to earning was indicating
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the growth
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right if you take a look at the total
[693]
revenues of the company right
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it has grown right it has grown
[696]
massively if you take a look at net
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income this is where the magic happens
[700]
right
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in literally three years time how much
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it has become right
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it has become 30 40 35 times right 35
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times
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the profits have increased for equitas
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financing and this information has been
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available since 2018
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right this is a massive massive massive
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massive boost
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now if you pick this up and combine it
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with the low p e
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that is existing i absolutely see no
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reason why
[726]
price to earning ratio of equitas so let
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me take you back now i see no reason why
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the price to earning ratio of equitas
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will not become something like bajaj
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finance right so therefore the stock has
[737]
been growing massively right so this is
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like
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one key good point about equidas finance
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so this is the first key point i will
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analyze
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second i will look at some of the key
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parameters because small finance bank as
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we read on the report
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it's a evolving industry right it is
[751]
very recent thing right
[752]
so does it have quality checks the
[756]
default probability is it low
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are is it is the quality fine are the
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growth parameters there right so this
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also indicates so we can give it another
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star
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right so now let us move on to analyzing
[767]
the fact when we should buy the stock so
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for this we do something called as
[770]
technical analysis
[771]
now let us figure out that hey should we
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when should we buy the stock now this is
[775]
what
[775]
we need to do we need to do the
[776]
technical analysis now lot of people
[778]
will tell you that you know what cup and
[779]
handle pattern is forming
[781]
accumulation is happening all that is
[783]
cool i am not against it do that i also
[785]
i myself do that as well
[787]
but here this is a fundamentally driven
[789]
stock so you need to keep that in mind
[791]
a stock that has the potential from
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going to 9x
[794]
in terms of p2e price to earning to 81x
[798]
right it will give growth right that is
[799]
what i have been betting on and that is
[801]
the reason why i have poured in so much
[803]
money right on this stock
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so this is what you need to do right now
[806]
what did i say one of the principles
[808]
that i had given you on earlier class
[810]
was
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that if a company is at its highest
[815]
ever profits right
[818]
and it is not trading at its highest
[823]
highest ever
[827]
price you should go and buy that stock
[829]
right
[830]
who gave this principle i have explained
[831]
it earlier please comment would really
[833]
appreciate it i would understand that
[834]
you are learning from my videos
[836]
so let's see so it was trading at
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somewhere around 188
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and now it is trading at 120 125 ish
[842]
levels
[843]
so if you take a look at the last five
[845]
year performance let's look at that so
[847]
again
[847]
like one same thing right it was trading
[849]
at approximately 200 that's the highest
[851]
level
[852]
now it's trading at 120 728 levels right
[855]
so if we if we actually take a look at
[856]
the current price
[857]
and compare it to its highest ever price
[859]
again good
[860]
strong fundamentals complete reading at
[862]
good price it has not
[864]
reached its highest ever potential yet
[866]
so i am quite confident that from here
[868]
it will at least reach to 200 in the
[869]
upcoming years
[870]
when will it reach i don't know maybe
[872]
three months maybe six months maybe one
[874]
year maybe two years i am completely
[876]
okay holding it for the long term
[877]
so essentially very quickly recapping
[880]
how did i do the analysis right number
[881]
one i looked at
[883]
industry right industry i looked at past
[887]
plus present trends on the industry
[889]
right
[890]
i looked at future trends in the
[891]
industry right that was
[893]
the first key piece of information that
[895]
i looked number two
[896]
i did peer analysis right to figure out
[898]
hey which stocks
[900]
might drew in the future right then i
[902]
bet big
[903]
on equitas holdings from that angle and
[906]
made massive returns right close to 28
[908]
lakhs in profit already
[909]
and i would continue to hold this stock
[911]
for a substantial future i am quite
[912]
happy with it i do see this industry
[914]
growing further this brings us to the
[916]
fourth part that hey what am i going to
[918]
do
[918]
on this talk so number one i am going to
[920]
continue to hold this stock
[922]
for the long term right what do i mean
[924]
by long term i don't know i am holding a
[925]
level of around 200
[927]
if the stock hits 200 that's what long
[929]
term means for me because i see it
[930]
growing to 200 levels
[932]
this is not an investment advice please
[934]
do your own due diligence i am just
[935]
telling you my methods
[937]
number two i am going to continue to buy
[939]
this stock on dips now you might say
[941]
that i have steps this is very scary
[942]
you what do you mean by dip right you
[944]
are saying that the stock will reach to
[945]
200 levels and now you are talking about
[947]
dips
[948]
yes so on this journey from 120 to 200
[951]
of course there will be dips it might go
[952]
down to 70 80 90 also i don't bother
[955]
because in the long term i still see
[957]
small finance bank industry growing
[960]
and equita is holding growing with it
[962]
right so therefore i'm quite bullish and
[964]
i'm okay right
[965]
buying more stocks on this dip right now
[967]
what are some of the risks that i see
[969]
so one of the risks or one of the only
[971]
risks that i see in this talk is that
[972]
this is a highly regulated industry
[974]
if tomorrow rbi gives more licenses to
[977]
small finance bank there will be more
[979]
competition
[980]
if tomorrow there is some issue that
[982]
goes on with
[983]
equitas holding some financial
[985]
regulatory issue of course these are
[986]
news driven items i'll keep a lookout
[988]
for this i will continue to monitor all
[990]
these different attributes on ticker
[992]
tape because it gives quality
[993]
information right so i'll keep a track
[995]
of it this is one of the key dangers
[997]
that i see
[997]
so to summarize i'm quite bullish on the
[999]
stock i'll continue to accumulate and
[1001]
i'll hold it for the long term and
[1002]
continue to make massive gains
[1004]
this brings us to the end of the video
[1006]
so i asked you a question at the start
[1007]
of this video that hey why is it that
[1009]
governments have to save banks right why
[1011]
is it that they can't let the banks die
[1013]
the answer there is twofold number one
[1016]
banks are systematically very important
[1018]
for any economy
[1019]
because the flow of the credit happens
[1021]
from the banks
[1022]
for example if banks go down tomorrow if
[1024]
hdfc ic i say all the banks shut
[1027]
then businesses cannot get credit right
[1029]
so banks have to be saved from that
[1031]
angle
[1031]
number two reason is that banks are
[1033]
interconnected with each other for
[1034]
example if any systematically important
[1037]
bank goes down
[1038]
which is a very big bank for example
[1040]
htfc goes down then along with it icici
[1043]
bank will also go down why because there
[1045]
is a lot of interlending between the
[1046]
banks
[1047]
right so therefore the government cannot
[1049]
let any major bank fail in any economy
[1052]
right
[1053]
that is literally the sign of an
[1054]
economic crash that if a bank if a major
[1057]
bank goes down in a country it can lead
[1059]
to a lot of problems
[1060]
so therefore i am generally bullish on
[1062]
the banking sector in entirety
[1064]
and especially i am bullish about small
[1066]
finance plan because they are available
[1068]
at an attractive valuation
[1069]
so i hope you enjoyed the video this is
[1071]
how i do fundamental analysis please
[1073]
check the link in the description box
[1074]
and please give it a like it would mean
[1076]
a lot to me
[1077]
thank you so much and i'll see you the
[1078]
next time
[1082]
[Music]
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