Glossary · 184 terms
Fundamental Analysis
All fundamental analysis terms in the EquitiesIndia.com glossary — plain-English definitions written for Indian retail investors.
Accounting Red Flags Checklist(Accounting Warning Signs)
An accounting red flags checklist is a structured set of warning signs in a company's financial statements — spanning revenue recognition, cash flow divergence, balance sheet manipulation, and disclosure practices — that may indicate earnings quality problems, aggressive accounting, or outright fraud.
Accrual Ratio(Sloan ratio)
The accrual ratio measures the proportion of a company's earnings that has not yet been received as cash, calculated by dividing the difference between net income and operating cash flow by average total assets; a high ratio signals that a large share of profits exists only on paper.
Altman Z-Score(Z-Score)
The Altman Z-Score is a financial distress prediction model developed by Edward Altman that combines five financial ratios into a single score to estimate the probability of a company becoming bankrupt within two years.
Altman Z-Score (Indian Application)(Z-Score bankruptcy)
The Altman Z-Score applied to Indian listed companies is a bankruptcy prediction model using five financial ratios weighted into a composite score, with the original model calibrated for US manufacturing firms requiring sector-specific recalibration for Indian companies, particularly in banking, real estate, and capital-intensive infrastructure sectors.
Annual Recurring Revenue (ARR)(ARR)
Annual Recurring Revenue is the annualised run-rate of subscription or contractual recurring revenue, stripping out one-time fees and variable usage components, and is the primary valuation anchor for SaaS and subscription-based Indian IT product companies.
Annual Return (Companies Act)(MGT-7)
The Annual Return is a statutory filing under Section 92 of the Companies Act 2013, made in Form MGT-7 (or MGT-7A for small companies), that every company is required to submit to the Registrar of Companies within 60 days of the AGM, containing comprehensive information about the company's shareholders, directors, promoters, and key management personnel.
ARPOB (Average Revenue Per Occupied Bed)(Average Revenue Per Occupied Bed)
ARPOB, or Average Revenue Per Occupied Bed, measures the revenue a hospital generates for every bed that is occupied over a given period, serving as the primary top-line productivity metric for the Indian healthcare sector.
ARPU (Average Revenue Per User)(Average Revenue Per User)
ARPU, or Average Revenue Per User, measures the average monthly or annual revenue generated per subscriber and is the central top-line metric for evaluating pricing power and monetisation efficiency in Indian telecom and digital services companies.
Asset Turnover Ratio(Total Asset Turnover)
Asset Turnover Ratio measures how efficiently a company uses its total assets to generate revenue, expressed as revenue divided by average total assets.
Attrition Rate(Employee Attrition)
Attrition Rate measures the percentage of employees who leave an organisation voluntarily during a given period, and in Indian IT and BPO companies it is tracked as a key operational and cost indicator because high attrition inflates recruitment, training, and project continuity costs.
Auditor Resignation Mid-Term(Auditor Departure)
A mid-term auditor resignation — where an auditor steps down before completing the full term of appointment — is treated by markets, regulators, and analysts as a significant red flag, often signalling an unresolved dispute between the auditor and management over accounting treatments, disclosures, or access to information.
Auditor Rotation(Mandatory Rotation)
Mandatory auditor rotation under the Companies Act 2013 requires listed companies and certain other large entities to change their statutory auditor every five years (individual auditor) or every ten years (firm), with a cooling-off period before re-appointment, to prevent over-familiarity that can compromise auditor independence.
Average Selling Price (ASP)(ASP)
Average Selling Price is the mean price at which a company sells one unit of its product over a defined period, functioning as a critical metric for tracking pricing trends, product mix shifts, and margin trajectories in auto, FMCG, and consumer durables sectors.
Balance Sheet Strength Score(Financial Strength Score)
A balance sheet strength score is a composite indicator that aggregates multiple solvency, liquidity, and financial flexibility metrics — such as current ratio, debt-to-equity, and interest coverage — to provide a single assessment of a company's financial resilience and ability to withstand stress.
Book Closure vs Record Date(Record Date)
Book closure was the historical practice of physically closing a company's share transfer register for a period to determine shareholders eligible for dividends or rights; the record date is the current equivalent — a single date on which shareholders on the register are entitled to the benefit — reflecting the transition from physical to dematerialised share holding.
Book Value Per Share(BVPS)
Book Value Per Share is the net asset value of a company allocated to each equity share, calculated by dividing total shareholders' equity by the number of outstanding shares.
Buyback Yield(share repurchase yield)
Buyback yield is the total value of shares repurchased by a company in a given year expressed as a percentage of its market capitalisation, measuring the return of capital to shareholders through buybacks analogously to how dividend yield measures cash dividend distributions.
Capex to Depreciation Ratio(capex/depreciation)
The Capex to Depreciation ratio compares a company's capital expenditure to its depreciation charge for the same period; a ratio consistently above 1 signals growth investment, a ratio around 1 indicates maintenance spending, and a ratio persistently below 1 raises concerns about under-investment that may erode future competitive capacity.
Capital Allocation(capital deployment)
Capital allocation refers to how a company's management decides to deploy its available capital — generated internally from operations or raised externally — across investments in organic growth, acquisitions, debt repayment, dividends, and share buybacks, and is considered a primary determinant of long-term shareholder value creation.
Capital Cycle Analysis(Capital Cycle)
Capital cycle analysis examines how capital flows into and out of an industry in response to profit signals, recognising that high returns attract new investment and capacity that eventually erodes those returns, while low returns drive capital exit and capacity reduction that eventually restores profitability.
Capital Employed
Capital Employed is the total amount of capital used by a business to generate profits, typically calculated as Total Assets minus Current Liabilities, and forms the denominator in the Return on Capital Employed (ROCE) ratio.
Capital Work in Progress (CWIP)(CWIP)
Capital Work in Progress represents expenditure on assets under construction that have not yet been commissioned and therefore do not yet attract depreciation, appearing as a non-depreciating asset on the balance sheet until capitalisation.
Cash Conversion Cycle(CCC)
The Cash Conversion Cycle (CCC) measures the number of days a company takes to convert its investments in inventory and other resources into cash flows from sales.
Cash Conversion Score(cash profit quality)
The Cash Conversion Score is a metric that measures the quality of a company's reported earnings by comparing cash profit generation — typically operating cash flow or free cash flow — to accounting profits such as net income or EBITDA, with a higher score indicating that earnings are genuinely backed by cash rather than accruals.
Cash Earnings(owner earnings)
Cash earnings is a measure of a company's profitability adjusted for non-cash charges such as depreciation, amortisation, and sometimes stock-based compensation, reflecting the actual cash surplus generated by operations before capital-expenditure decisions.
Cash Flow Quality Score(CFO Quality)
A cash flow quality score is a composite assessment of how reliably a company converts reported accounting profits into real operating cash flows, using metrics such as CFO-to-EBITDA ratio, accrual ratio, and capex consistency to distinguish genuine cash generators from accounting-driven profit reporters.
Cash Profit(Cash Earnings)
Cash Profit is a simplified measure of cash-generative earnings calculated by adding depreciation and amortisation back to profit after tax, providing an approximation of operating cash generation before working capital changes.
Cash Return on Invested Capital (CROIC)(CROIC)
Cash Return on Invested Capital replaces accounting earnings with free cash flow in the ROIC formula, measuring the actual cash-generative efficiency of capital deployed in a business.
Chairman and Managing Director (CMD)(CMD)
The Chairman and Managing Director is a dual role combining the leadership of the Board and the executive management of a company in a single individual, a structure that SEBI's corporate governance reforms have sought to separate to improve board independence and oversight effectiveness.
Churn Rate(Customer Churn)
Churn Rate is the percentage of subscribers or customers who discontinue a service or cancel a subscription within a given period, and it is the primary measure of customer retention risk for Indian telecom operators, SaaS companies, and subscription-based digital platforms.
Comparable Company Analysis (Comps)(Trading Comps)
Comparable company analysis (comps) is a relative valuation method that determines a company's value by benchmarking its financial multiples — such as EV/EBITDA, P/E, or P/Sales — against a peer group of publicly traded companies with similar business characteristics.
Competitive Advantage Period (CAP)(CAP)
The Competitive Advantage Period (CAP) is the estimated number of years over which a firm is expected to earn returns on invested capital above its cost of capital before competition erodes the excess returns to zero — a critical variable in determining a company's intrinsic value.
Conference Call(earnings call)
A conference call — also known as an earnings call — is a scheduled audio or video session hosted by a company's senior management after quarterly or annual result announcements, during which analysts and institutional investors ask questions, and the transcript of which becomes a primary source of qualitative intelligence for fundamental research.
Consensus Estimate(Street Estimate)
A consensus estimate is the statistical aggregation — typically the mean or median — of all analyst forecasts for a company's earnings, revenue, or other financial metrics, compiled by data providers such as Bloomberg, Refinitiv, and FactSet and used as the market's official expectation benchmark.
Contingent Liability Ratio(Off-Balance-Sheet Risk Ratio)
The Contingent Liability Ratio expresses a company's contingent liabilities — potential obligations dependent on future uncertain events — as a percentage of net worth, assessing the scale of off-balance-sheet risk relative to equity cushion.
Core vs Non-Core Income(core earnings)
Core income refers to revenue and profit generated from a company's primary business activities that are expected to recur, while non-core income includes earnings from peripheral or one-time sources — such as asset sales, investment income, or treasury gains — that do not reflect sustainable operating performance.
Corporate Governance Score(Governance Rating)
A corporate governance score is a composite quantitative or qualitative rating assigned to a listed company based on its adherence to governance best practices across board structure, disclosure quality, shareholder rights, audit quality, and related party transaction management, produced by proxy advisors, rating agencies, and SEBI-recognised governance rating institutions.
Cost Advantage Moat(Low Cost Producer Moat)
A cost advantage moat occurs when a company can produce goods or services at structurally lower cost than its competitors due to scale, superior processes, advantageous geographic location, or unique resource access, enabling it to sustain margins or undercut rivals without sacrificing profitability.
Creditors Days / Payable Days(DPO)
Creditors Days, also called Payable Days or Days Payable Outstanding, measures the average number of days a company takes to pay its suppliers, reflecting the payment terms secured and the use of trade credit as a source of working capital financing.
Current Ratio(Working Capital Ratio)
The Current Ratio measures a company's ability to meet its short-term obligations using its short-term assets, calculated by dividing current assets by current liabilities.
Customer Acquisition Cost (CAC)(CAC)
Customer Acquisition Cost is the total cost a company incurs to acquire one new paying customer, encompassing marketing spend, sales force expenses, and channel incentives, and is a pivotal unit economics metric for Indian fintech, e-commerce, and consumer internet companies.
Daily Active Users (DAU)(DAU)
Daily Active Users measures the unique users engaging with a platform on a given day, and the DAU/MAU ratio — which expresses daily as a share of monthly actives — is the key engagement intensity metric, indicating how habitually users return to a platform.
Debt Service Coverage Ratio (DSCR)(DSCR)
The Debt Service Coverage Ratio measures a company's ability to service all debt obligations — both interest payments and principal repayments — from its operating cash flows, making it more comprehensive than simple interest coverage.
Debt-to-Equity Ratio(D/E Ratio)
The Debt-to-Equity Ratio compares a company's total financial debt to its shareholders' equity, measuring the extent to which the business is financed by creditors versus owners.
Debtors Days / Receivable Days(DSO)
Debtors Days, also called Receivable Days or Days Sales Outstanding, measures the average number of days a company takes to collect payment after a sale, quantifying the credit period extended to customers.
Degree of Financial Leverage (DFL)(DFL)
Degree of Financial Leverage measures how sensitively earnings per share responds to a given percentage change in EBIT, capturing the amplification created by fixed interest obligations in the capital structure.
Degree of Operating Leverage (DOL)(DOL)
Degree of Operating Leverage quantifies how sensitively a company's EBIT responds to a given percentage change in revenue, reflecting the proportion of fixed costs in the cost structure and the amplification they create in earnings variability.
Diluted EPS(Fully Diluted EPS)
Diluted EPS adjusts the basic earnings per share to account for all potential equity shares that could be created through the conversion of securities such as ESOPs, warrants, and convertible instruments.
Discounted Cash Flow (DCF)(DCF)
Discounted Cash Flow (DCF) is an intrinsic valuation method that estimates the present value of a company by discounting its projected future free cash flows back to today using the Weighted Average Cost of Capital (WACC), representing the idea that a rupee received in the future is worth less than a rupee today.
Dividend Discount Model (DDM)(DDM)
The Dividend Discount Model (DDM) values a stock as the present value of all expected future dividends, with the Gordon Growth Model being its most widely applied form — asserting that a stable, perpetually growing dividend stream can be valued as a simple perpetuity adjusted for growth.
Dividend Payout Ratio(Payout Ratio)
The Dividend Payout Ratio is the proportion of a company's net earnings paid out as dividends to shareholders, expressed as a percentage of earnings per share or total net profit.
Dividend Policy(Dividend Distribution Policy)
Dividend policy refers to the framework a company uses to determine the proportion of earnings distributed to shareholders as dividends, balancing the return of capital to shareholders against the retention of earnings for reinvestment, and acting as a signalling mechanism about management's confidence in future earnings.
Dividend Yield(Dividend Yield %)
Dividend Yield is the annual dividend per share expressed as a percentage of the current share price, indicating the income return an investor earns from holding the stock relative to its market value.
DuPont Analysis
DuPont Analysis is a framework that decomposes Return on Equity (ROE) into three or five component ratios — net profit margin, asset turnover, and financial leverage — to identify the specific operational and financial drivers of a company's equity returns.
Earnings Before Interest After Tax (EBIAT)(NOPAT)
EBIAT, also called Net Operating Profit After Tax or NOPAT, measures the after-tax operating profit of a business as if it carried no debt, isolating the earnings power of operations from financing decisions.
Earnings Growth(EPS Growth)
Earnings Growth refers to the rate at which a company's net profit or earnings per share increases over a specified period, and is a central driver of long-term share price appreciation.
Earnings Quality(earnings sustainability)
Earnings quality refers to the degree to which reported net profit accurately reflects the sustainable cash-generating ability of a business, with high-quality earnings being those driven by core operating performance and closely mirrored by actual cash flows rather than accounting adjustments.
Earnings Revision(Estimate Revision)
An earnings revision is a change in an analyst's forward earnings per share estimate for a company, reflecting new information from quarterly results, management guidance, sector developments, or macroeconomic data; revision momentum is a widely used factor in quantitative equity strategies.
Earnings Yield(E/P Ratio)
Earnings Yield is the ratio of a company's earnings per share to its current market price, expressed as a percentage, and is effectively the inverse of the Price-to-Earnings ratio.
EBITDA(Earnings Before Interest Taxes Depreciation and Amortisation)
EBITDA — Earnings Before Interest, Taxes, Depreciation, and Amortisation — is a proxy for a company's core operating cash generation, stripping out the effects of financing decisions and non-cash charges.
EBITDA Growth Rate(operating profit growth)
EBITDA growth rate measures the percentage change in a company's earnings before interest, taxes, depreciation, and amortisation over a period; unlike revenue growth, it captures operational efficiency improvements alongside volume expansion, and acceleration in EBITDA growth relative to revenue growth signals margin expansion.
EBITDA Per Tonne(EBITDA/tonne)
EBITDA Per Tonne measures the earnings before interest, taxes, depreciation, and amortisation generated per metric tonne of production, and is the standard operating profitability benchmark used to compare cement companies, steel producers, and aluminium smelters in India.
Edward Altman Model vs Ohlson Model(Ohlson O-Score)
The Altman Z-Score and the Ohlson O-Score are two foundational quantitative frameworks for predicting corporate financial distress and bankruptcy, differing in statistical methodology, input variables, and calibration — the Altman model using linear discriminant analysis and the Ohlson model using logistic regression, with each offering distinct advantages and limitations when applied to Indian listed companies.
Effective Tax Rate(ETR)
The effective tax rate is the actual percentage of pre-tax profit that a company pays in taxes, calculated by dividing total tax expense by profit before tax; it differs from the statutory corporate tax rate due to deductions, exemptions, deferred tax movements, and incentive schemes.
Efficient Scale Moat(Natural Monopoly Moat)
An efficient scale moat exists when a market is large enough to support only one or a few profitable competitors, making new entry irrational because the additional supply would reduce industry returns below the cost of capital for all participants, including the new entrant.
Emphasis of Matter (Detailed)(EOM)
An Emphasis of Matter paragraph is an additional communication in an auditor's report, required under SA 706, that draws readers' attention to a matter properly disclosed in the financial statements that is fundamental to users' understanding of the statements, without modifying the auditor's opinion.
Enterprise Value(EV)
Enterprise Value (EV) is a measure of a company's total economic value, calculated as market capitalisation plus total debt minus cash and cash equivalents, and represents the theoretical takeover price an acquirer would pay.
Enterprise Value to Sales(EV/Sales)
Enterprise Value to Sales (EV/Sales) is a capital-structure-neutral valuation multiple that compares a company's total enterprise value — equity market cap plus net debt — to its annual revenue, making it useful for valuing businesses with negative or volatile earnings where earnings-based multiples break down.
EPS(Earnings Per Share)
Earnings Per Share (EPS) is the portion of a company's net profit allocated to each outstanding equity share, and serves as one of the most fundamental indicators of corporate profitability.
Equity Multiplier(Assets-to-Equity Ratio)
The Equity Multiplier is the ratio of total assets to shareholders equity, representing the degree to which a company finances its asset base with equity versus debt, and serving as the financial leverage component in the DuPont decomposition of ROE.
ESOP Dilution Impact(ESOP Dilution)
ESOP dilution impact refers to the effect of outstanding employee stock options on a company's earnings per share, capital structure, and shareholder returns, requiring analysis of both the accounting expense recognised under Ind AS 102 and the potential future dilution of equity when options are exercised.
EV/EBIT(Enterprise Value to EBIT)
EV/EBIT divides a company's enterprise value by its earnings before interest and taxes, offering a capital-structure-neutral measure of operating profitability that is more conservative than EV/EBITDA.
EV/EBITDA(Enterprise Value to EBITDA)
EV/EBITDA (Enterprise Value to EBITDA) is a valuation multiple that compares a company's total enterprise value — equity plus net debt — to its EBITDA, offering a capital-structure-neutral view of valuation.
EV/Invested Capital(EV to IC)
EV/Invested Capital measures the premium the market assigns above the capital deployed in a business, linking valuation to capital efficiency and the underlying economics of value creation.
EV/Revenue(EV/Sales)
EV/Revenue is a valuation multiple that divides a company's Enterprise Value by its annual revenue, providing a capital-structure-neutral measure of how much investors valued each rupee of sales.
Expected Return Decomposition(Return Decomposition)
Expected return decomposition breaks down the total return an investor can expect from a stock into its component parts — earnings growth, dividend yield, and change in valuation multiple — providing a transparent framework for assessing whether expected returns justify the risk.
Fair Value(fair value estimate)
Fair value is the price at which a willing buyer and a willing seller would transact when both possess reasonable knowledge of relevant facts and neither is under compulsion — a concept enshrined in Ind AS 113 and central to how analysts frame whether a stock is appropriately priced.
Financial Leverage
Financial Leverage refers to the use of borrowed funds to amplify the potential return on equity, with the degree of financial leverage measuring how sensitive earnings per share are to changes in operating profit due to the presence of fixed interest charges.
Fixed Asset Turnover(PPE Turnover)
Fixed Asset Turnover measures revenue generated per rupee of net property, plant, and equipment, indicating how efficiently a company deploys its physical infrastructure to produce sales.
Forward P/E vs Trailing P/E (Detailed)(PE Ratio Types)
Forward P/E uses analyst consensus estimates of next-year earnings as the denominator, making it more relevant for valuation in growing markets, while trailing P/E uses the last twelve months of actual reported earnings and is more appropriate when earnings visibility is low or estimates are unreliable.
Free Cash Flow(FCF)
Free Cash Flow (FCF) is the cash a company generates from operations after deducting capital expenditure, representing the true cash available for debt repayment, dividends, buybacks, or further investment.
Free Cash Flow Yield(owner earnings yield)
Free Cash Flow Yield (FCF Yield) is the ratio of free cash flow to market capitalisation, representing the percentage of the market cap generated as surplus cash available to shareholders; it is closely linked to Warren Buffett's concept of owner earnings and serves as an equity analogue to the bond yield.
GRM (Gross Refining Margin)(GRM)
Gross Refining Margin is the difference between the market value of all petroleum products produced by a refinery and the cost of the crude oil feedstock, expressed on a per-barrel basis, and it is the primary profitability metric for Indian oil refining companies.
Gross Block vs Net Block(Gross Fixed Assets vs Net Fixed Assets)
Gross Block is the total historical cost of all fixed assets before depreciation, while Net Block is gross block minus accumulated depreciation, together revealing the age, utilisation, and replacement proximity of a company's physical asset base.
Gross Merchandise Value (GMV)(GMV)
Gross Merchandise Value is the total value of goods or services sold through a marketplace platform before deducting returns, discounts, or the platform's own take rate, and it is the headline scale metric for Indian e-commerce, hyperlocal delivery, and fintech marketplace companies.
Gross Profit Margin(Gross Margin)
Gross Profit Margin measures gross profit — revenue minus cost of goods sold — as a percentage of revenue, indicating how much is left after covering direct production costs before any operating expense is deducted.
Gross Profit Margin Trend(Gross Margin Trend)
Gross Profit Margin Trend analyses the trajectory of a company's gross margin — revenue minus cost of goods sold divided by revenue — over multiple periods to detect structural expansion, contraction, or cyclical swings in pricing power and input cost dynamics.
Growth Quality Assessment(Organic Growth Analysis)
Growth quality assessment distinguishes between organic growth — driven by market share gains, new product launches, and volume expansion — and inorganic growth from acquisitions, evaluating whether reported growth is sustainable, capital-efficient, and translating into genuine value creation.
Holding Company Discount(Conglomerate Discount)
The holding company discount is the difference between a conglomerate or holding company's market capitalisation and the sum of the market values of its listed and unlisted subsidiaries and associates, reflecting investor scepticism about management allocation, complexity, and the cost of the holding structure itself.
Institutional Investor Activism(Shareholder Activism)
Institutional investor activism involves large institutional shareholders — mutual funds, insurance companies, pension funds, and foreign portfolio investors — using their ownership stakes to actively engage with company management on governance, strategy, and capital allocation, rather than passively accepting or simply selling their holdings.
Intangible Asset Moat(Brand Moat)
An intangible asset moat exists when a company derives durable pricing power or market exclusivity from non-physical assets such as brand equity, patents, proprietary processes, or regulatory licences that competitors cannot easily replicate.
Interest Coverage Ratio(Debt Service Coverage)
The Interest Coverage Ratio measures how many times a company's operating earnings can cover its interest expense, indicating its ability to service debt obligations from its current earnings.
Interest Expense Coverage Trend(ICR Trend)
Interest Expense Coverage Trend analyses the trajectory of a company's interest coverage ratio — EBIT or EBITDA divided by interest expense — over multiple periods to assess whether debt serviceability is improving, stable, or deteriorating.
Intrinsic Value (Stocks)(Graham formula)
Intrinsic value of a stock is the estimated true economic worth of a share derived from the company's fundamentals, independent of its current market price — most famously formalised by Benjamin Graham through a discounted earnings formula.
Inventory Turnover(Stock Turnover Ratio)
Inventory Turnover measures how many times a company sells and replaces its inventory within a period, reflecting the efficiency of inventory management and demand strength.
Invested Capital
Invested Capital is the total amount of money raised by a company from equity shareholders and interest-bearing debt providers that has been deployed into the core operations of the business, and forms the denominator of the Return on Invested Capital (ROIC) metric.
Investment Checklist Framework(Investment Checklist)
An investment checklist framework is a systematic, structured list of questions and criteria that an investor evaluates before committing capital, designed to prevent cognitive biases and ensure consistent, comprehensive analysis across all investment decisions.
Investor Presentation(earnings deck)
An investor presentation is a structured slide deck prepared by a listed company and distributed to institutional investors, analysts, and the public — typically accompanying quarterly results, capital market days, or analyst meetings — summarising business performance, strategy, competitive positioning, and financial metrics in a visually organised format.
Key Audit Matters (Detailed)(KAM)
Key Audit Matters (KAM), required for listed companies under SA 701, are those matters that in the auditor's professional judgment were of most significance in the audit of the current period financial statements — typically involving the highest areas of estimation uncertainty, management judgement, or unusual transactions — communicated to help users understand the nature and focus of the audit.
Key Managerial Personnel (KMP)(KMP)
Key Managerial Personnel under Section 203 of the Companies Act 2013 are the designated individuals — Managing Director or CEO, Chief Financial Officer, Company Secretary, and Whole-time Directors — who are collectively responsible for the overall management, financial reporting, and statutory compliance of a company.
Lifetime Value (LTV)(LTV)
Lifetime Value represents the total net revenue or gross profit a company expects to earn from a customer over the entire duration of the relationship, and when compared against Customer Acquisition Cost in the LTV:CAC ratio, it is the cornerstone unit economics test for Indian consumer internet and fintech businesses.
Liquidation Value(NNWC)
Liquidation value is the net amount that shareholders would theoretically receive if a company ceased operations, sold all assets at distressed prices, and repaid all liabilities; Benjamin Graham used liquidation value — specifically Net-Net Working Capital — as the ultimate floor for identifying deeply undervalued stocks.
Management Commentary(MD&A)
Management commentary encompasses the qualitative discussion and analysis provided by a company's board and senior executives in the Management Discussion and Analysis (MD&A) section of the annual report, as well as in quarterly result press releases and earnings calls, offering context for reported numbers and forward-looking perspectives on business environment and strategy.
Management Discussion and Analysis (MD&A)(MDA)
The Management Discussion and Analysis section of an annual report is a mandated narrative by SEBI's LODR Regulations in which management explains the company's financial results, operating performance, risks, and strategic outlook in qualitative terms, offering context that numbers alone cannot convey.
Management Quality Assessment(Mgmt Quality)
Management quality assessment is a qualitative framework for evaluating the competence, integrity, and capital allocation track record of a company's leadership, forming one of the most important but inherently subjective dimensions of fundamental equity analysis.
Margin of Safety(MoS)
Margin of safety is the difference between a stock's intrinsic value and its current market price, expressed as a percentage; it represents the cushion an investor has against errors in valuation or unexpected deterioration in business performance.
Margin of Safety (Practical Application)(MOS)
Margin of safety in practical investing refers to the percentage gap between a stock's intrinsic value — estimated through discounted cash flow, asset-based, or earnings power analysis — and its current market price, with a larger gap providing greater protection against valuation errors, business uncertainty, and unforeseen adverse events.
Market Cap to Sales(P/S Ratio)
Market Cap to Sales, also known as the Price-to-Sales (P/S) ratio, compares a company's total market capitalisation to its annual revenue, indicating how much investors paid per rupee of sales.
Mean Reversion in Valuations(PE Mean Reversion)
Mean reversion in valuations describes the empirical tendency of equity market P/E ratios and other valuation multiples to oscillate around a long-run average, with periods of elevated multiples followed by contraction and periods of compressed multiples followed by expansion.
Moat (Economic Moat)(competitive moat)
An economic moat is a durable structural advantage that allows a company to earn above-average returns on capital for an extended period by defending its market position against competition — the term was coined by Warren Buffett drawing an analogy to the water-filled trench that protected medieval castles.
Monthly Active Users (MAU)(MAU)
Monthly Active Users is the count of unique users who engage with a digital platform at least once within a calendar month, serving as the primary audience and engagement scale metric for Indian digital platforms, apps, and consumer internet companies.
Net Income(Net Profit)
Net Income (or net profit) is a company's total earnings after deducting all expenses — including operating costs, interest, depreciation, taxes, and exceptional items — from total revenue.
Net Profit Margin(Net Margin)
Net Profit Margin expresses net profit (after all expenses, interest, depreciation, and taxes) as a percentage of revenue, indicating how much of each rupee of sales ultimately translates into profit for shareholders.
Net Promoter Score (NPS)(NPS)
Net Promoter Score is a customer loyalty metric derived from asking respondents how likely they are to recommend a company's product or service on a zero-to-ten scale, with promoters (9-10) minus detractors (0-6) giving the NPS, used by Indian consumer, fintech, and telecom companies to proxy long-term customer retention quality.
Net Revenue Retention (NRR)(NRR)
Net Revenue Retention measures how much revenue a SaaS or subscription company retains from its existing customer cohort over a twelve-month period after accounting for churn, contraction, and expansion, with a figure above 100 per cent indicating that upsells and expansions more than offset losses.
Network Effect Moat(Network Effects)
A network effect moat arises when a product or platform becomes more valuable to each user as the total number of users grows, creating a self-reinforcing cycle that makes the incumbent increasingly difficult to displace even if a competitor offers a technically superior product.
Normalised Earnings(adjusted earnings)
Normalised earnings represent a company's profit adjusted to remove distortions from non-recurring items, abnormal tax rates, cyclical peaks or troughs, and accounting choices, providing an estimate of the sustainable mid-cycle earning power that is most appropriate for valuation.
One-Time Items(exceptional items)
One-time items are gains or losses reported in a company's income statement that are non-recurring in nature — such as restructuring charges, impairment write-downs, litigation settlements, or profits from asset disposals — and that distort the assessment of sustainable earnings if included without adjustment.
Operating Cash Flow(OCF)
Operating Cash Flow (OCF) is the net cash generated by a company's core business operations during a period, as reported in the cash flow statement, reflecting the liquidity created before financing and investing activities.
Operating Leverage
Operating Leverage measures the sensitivity of a company's operating profit to changes in revenue, arising from the presence of fixed costs in the cost structure — a high proportion of fixed costs amplifies both profit gains during revenue growth and losses during revenue decline.
Operating Profit Margin(EBIT Margin)
Operating Profit Margin measures EBIT (or PBIT) as a percentage of revenue, reflecting the core business profitability before the effects of financing costs and taxes.
Operating vs Non-Operating Income(EBIT)
Operating income is earned from a company's core business activities — manufacturing, selling products, or providing services — while non-operating income arises from peripheral activities such as interest received on investments, dividend income, foreign exchange gains, or profits on asset sales.
P/B Ratio(Price-to-Book Ratio)
The Price-to-Book Ratio compares a company's market capitalisation to its net book value, indicating how much premium (or discount) the market places on the company's accounting net worth.
P/E Ratio(Price-to-Earnings Ratio)
The Price-to-Earnings Ratio measures how much investors are willing to pay for every rupee of a company's earnings. It is one of the most widely used valuation metrics in equity research.
Payables Turnover(Creditors Turnover)
Payables Turnover measures how many times a company pays its suppliers during a period, reflecting the speed of supplier payment and the extent to which trade credit is used as a source of working capital financing.
Peer Comparison(comparable company analysis)
Peer comparison is the analytical process of evaluating a company's financial performance, valuation multiples, and operational metrics against a group of similar companies in the same industry, providing context to determine whether observed results represent genuine outperformance or merely reflect industry-wide conditions.
PEG Ratio(Price/Earnings to Growth Ratio)
The PEG Ratio (Price/Earnings to Growth) adjusts the P/E ratio by the company's expected earnings growth rate, providing a more nuanced valuation that accounts for future growth potential.
PEG Ratio — Detailed Application(PEG)
The Price-to-Earnings Growth ratio refines the P/E multiple by dividing it by the expected earnings growth rate, allowing analysts to assess whether a stock's valuation is justified by its growth trajectory.
Piotroski F-Score(F-Score)
The Piotroski F-Score is a nine-point scoring system developed by accounting professor Joseph Piotroski that assesses the financial strength and improving fundamentals of a company across profitability, leverage, and operating efficiency dimensions.
Piotroski Score (Practical Screening)(F-Score)
The Piotroski F-Score is a nine-point accounting-based scoring system developed by Joseph Piotroski in 2000 that evaluates a company's financial health across profitability, leverage/liquidity, and operating efficiency signals, with practical applications in Indian stock screening to separate financially strengthening companies from deteriorating ones within a value universe.
Pledging Ratio(Promoter Pledge Ratio)
The Pledging Ratio measures the proportion of promoter-held shares that have been pledged as collateral against loans, serving as a key governance and financial stress indicator unique to Indian equity markets.
Precedent Transaction Analysis(Transaction Comps)
Precedent transaction analysis values a company by examining the multiples paid in historical mergers and acquisitions of comparable businesses, typically revealing a control premium over listed market prices that reflects the strategic value a buyer places on ownership.
Price to Cash Flow(P/CF ratio)
Price to Cash Flow (P/CF) is a valuation multiple that divides a stock's market price by its operating cash flow per share, offering a profitability measure that is harder to manipulate than reported earnings because cash flow requires actual cash receipts rather than accrual-based accounting entries.
Price to Free Cash Flow(P/FCF)
Price to Free Cash Flow (P/FCF) is a valuation multiple that compares a company's market capitalisation to its free cash flow, showing how much investors paid for each rupee of cash the business generated after funding its capital expenditures.
Price to Tangible Book Value(P/TBV)
Price to Tangible Book Value measures a stock's market price against its book value after removing goodwill and other intangible assets, providing a harder, more conservative measure of underlying net asset value.
Price-to-Earnings Band Chart(PE Band)
A P/E band chart overlays multiple historical P/E multiple lines — typically the five to seven year average and one to two standard deviations above and below — onto a stock's price chart, visually identifying periods when the stock traded at historically cheap or expensive valuations.
Price-to-Sales Ratio(P/S Ratio)
The Price-to-Sales Ratio (P/S) compares a company's market capitalisation to its annual revenue, offering a valuation benchmark that remains applicable even when earnings are negative.
Promoter Group (Detailed)(PAC)
The promoter group under SEBI regulations is a broader circle of persons acting in concert with the promoter, encompassing family members, group companies, and parties with significant shareholding links, all of whom are subject to enhanced disclosure and holding restrictions.
Promoter Pledge Impact(Pledge Invocation)
Promoter pledge refers to the hypothecation of promoter shares as collateral for loans; the risk to minority shareholders arises when falling stock prices trigger margin calls, forcing lenders to sell pledged shares in the open market, accelerating a downward price spiral.
Promoter Remuneration Analysis(Promoter Salary Analysis)
Promoter remuneration analysis examines the total compensation — salary, commission, perquisites, and related-party payments — drawn by promoters and their family members from a listed company to assess whether shareholder interests are being subordinated to promoter self-interest.
Qualified Opinion vs Adverse Opinion vs Disclaimer(Modified Opinion)
An auditor's qualified opinion means the financial statements are fairly presented except for a specific identified matter; an adverse opinion states the financial statements do not present a true and fair view; and a disclaimer of opinion indicates the auditor was unable to obtain sufficient evidence to form any opinion, each representing a progressively more serious departure from a clean audit report.
Qualitative Analysis(Soft Analysis)
Qualitative analysis in equity research involves assessing non-numerical aspects of a business — including management quality, corporate culture, competitive positioning, brand strength, and ethical standards — that determine whether strong financial metrics are durable or transient.
Quantitative Screening(Rules-Based Screening)
Quantitative screening is a rules-based approach to stock selection that uses objective, measurable financial metrics — often combined into composite factor scores — to rank or filter a stock universe without reliance on subjective judgement at the initial stage.
Quick Ratio(Acid-Test Ratio)
The Quick Ratio (or Acid-Test Ratio) is a stricter liquidity measure than the current ratio, excluding inventory and prepaid expenses from current assets to assess whether a company can meet immediate obligations with its most liquid assets.
R&D Intensity(R&D as % of Revenue)
R&D Intensity measures research and development expenditure as a percentage of revenue, indicating how heavily a company invests in innovation and future product pipelines — a critical metric in Indian pharmaceuticals and information technology.
Receivables Turnover(Debtors Turnover)
Receivables Turnover measures how many times a company collects its average trade receivables during a period, indicating the speed and efficiency with which credit sales are converted into cash.
Regression-Based Valuation(Cross-Sectional Regression Valuation)
Regression-based valuation determines a fair multiple for a stock by running a statistical regression of price multiples (such as P/E) against fundamental drivers (such as earnings growth, ROCE, or dividend payout) across a peer set, generating a predicted multiple that reflects what the market pays for each unit of quality.
Related Party Transaction (Detailed)(RPT)
A related party transaction under Ind AS 24 is any transfer of resources, services, or obligations between an entity and a related party, regardless of whether a price is charged, and requires disclosure of the nature, amount, and terms to allow users of financial statements to assess the arm's length character of the dealing.
Related Party Transaction Intensity(RPT Intensity)
Related Party Transaction Intensity measures the aggregate value of transactions between a company and its related parties — promoter entities, subsidiaries, associates, and key management personnel — as a percentage of consolidated revenue, indicating the degree to which financial flows are channelled through affiliated entities.
Relative Valuation(comparable company analysis)
Relative valuation is a method of estimating the value of a company by comparing its valuation multiples—such as PE, EV/EBITDA, or Price-to-Book—to those of peer companies or sector averages, based on the principle that similar businesses should trade at similar prices relative to their earnings or assets.
Replacement Cost(Tobin's Q)
Replacement cost is the amount a company would need to spend today to recreate its asset base from scratch; when compared to market capitalisation, it yields Tobin's Q — a ratio used to assess whether asset-heavy businesses are trading at a premium or discount to the cost of building equivalent capacity.
Reserves Classification(Other Equity)
Reserves in a company's balance sheet are classified into capital reserve, securities premium reserve, general reserve, and retained earnings (surplus in profit and loss), each arising from different sources and carrying different restrictions on utilisation and distribution to shareholders.
Residual Income Model(RIM)
The Residual Income Model (RIM) values a stock as its current book value plus the present value of all future excess returns over the cost of equity — capturing value creation not from dividends paid out but from returns earned in excess of what capital providers demand, closely related to the Economic Value Added framework.
Return on Invested Capital(ROIC)
Return on Invested Capital (ROIC) measures the percentage return a company generates on the total capital invested in its core operations, calculated as Net Operating Profit After Tax (NOPAT) divided by Invested Capital, and is widely regarded as the most rigorous measure of capital efficiency and value creation.
Revenue(Turnover)
Revenue (also called turnover or net sales) is the total income generated by a company from its primary business activities before any costs or expenses are deducted.
Revenue Growth Rate(topline growth)
Revenue growth rate measures the percentage change in a company's topline income over a specified period, with compound annual growth rate (CAGR) over three to five years being the standard metric; separating organic growth from inorganic growth via acquisitions is essential for assessing the quality and sustainability of expansion.
Revenue Per Employee(Revenue Productivity)
Revenue Per Employee measures the annual revenue a company generates for each full-time equivalent employee on its rolls, serving as the primary productivity and efficiency benchmark in labour-intensive industries such as Indian IT services.
Reverse DCF(Reverse Discounted Cash Flow)
A reverse DCF works backwards from a company's current market price to calculate the revenue growth rate or ROIC improvement that is implicitly embedded in that price, making explicit what expectations must be true for the current valuation to be justified.
ROA(Return on Assets)
Return on Assets (ROA) indicates how profitably a company uses its total asset base to generate earnings, expressed as net profit divided by average total assets.
ROCE(Return on Capital Employed)
Return on Capital Employed (ROCE) measures the profitability of a business relative to the total capital it uses — both equity and debt — making it a more comprehensive metric than ROE for capital-intensive industries.
ROE(Return on Equity)
Return on Equity (ROE) measures how efficiently a company generates profit from shareholders' equity, expressed as a percentage. It is a core indicator of management's effectiveness in deploying capital.
Same-Store Sales Growth (SSSG)(SSSG)
Same-Store Sales Growth measures the revenue change for retail outlets or restaurant locations that have been open for at least twelve months, isolating organic performance from the distortion caused by new store additions.
Screener (Stock Screening Tool)(Stock Screener)
A stock screener is a software-based filter that narrows a broad universe of listed companies down to a shortlist matching user-defined financial or qualitative criteria, enabling analysts to identify candidates for deeper research without manually reviewing thousands of stocks.
SEBI Stewardship Code (Detailed)(Stewardship Code)
The SEBI Stewardship Code, introduced in 2019 and extended progressively to mutual funds, insurance companies, and other institutional investors, mandates that institutions formulate and publicly disclose voting policies, exercise voting rights in the interest of beneficiaries, manage conflicts of interest, and report periodically on stewardship activities at investee companies.
Sector Rotation(cyclical rotation)
Sector rotation is the investment strategy of shifting capital from one industry sector to another in anticipation of changing economic conditions, business cycles, interest rate environments, or policy shifts — based on the observation that different sectors tend to outperform at different stages of the economic cycle.
Segment Reporting (Detailed)(Ind AS 108)
Segment reporting under Ind AS 108 requires companies to disclose financial information about their operating segments — the components for which the chief operating decision-maker regularly reviews discrete financial information — enabling investors to understand the diverse sources of revenue, profit, and capital employed within a diversified business.
SG&A Ratio(SG&A as % of Revenue)
The SG&A Ratio expresses selling, general, and administrative expenses as a percentage of revenue, measuring the overhead efficiency of a business and its ability to scale revenues without proportionally increasing fixed-cost infrastructure.
Share Capital Structure(Equity Capital Structure)
Share capital structure encompasses the authorised, issued, subscribed, and paid-up categories of share capital disclosed in a company's balance sheet, reflecting the full lifecycle from the legal ceiling on capital the company may issue to the actual paid capital that forms the permanent equity base.
Shareholder Value Creation(Economic Value Added)
Shareholder value creation occurs when a company consistently earns returns on invested capital (ROIC) above its weighted average cost of capital (WACC), generating economic value added (EVA) that compounds over time and justifies premium valuations relative to book value.
Shareholder Yield(total shareholder yield)
Shareholder yield is a comprehensive measure of the total cash returned to equity shareholders through all channels — dividends, share buybacks, and net debt repayment — expressed as a percentage of market capitalisation, offering a fuller picture of capital return than dividend yield alone.
Standalone vs Consolidated Financials (Detailed)(Consol vs Standalone)
Standalone financial statements reflect only the parent entity's own operations, while consolidated financial statements aggregate the parent and all its subsidiaries into a single economic unit, each providing different but complementary information for assessing a business group's performance and financial position.
Stock Universe(Investable Universe)
A stock universe is the defined pool of listed securities from which an investor or fund manager selects positions, with the boundaries set by index membership, market capitalisation thresholds, liquidity criteria, or regulatory eligibility rules.
Subsidiary vs Associate vs Joint Venture(Ind AS 28)
A subsidiary is an entity controlled by a parent (Ind AS 110); an associate is an entity over which significant influence but not control is exercised, typically indicated by 20 to 50 percent ownership (Ind AS 28); and a joint venture is a jointly controlled entity under a contractual arrangement (Ind AS 111), each requiring different accounting treatments in consolidated financial statements.
Sum-of-Parts vs Relative Valuation(SOTP Valuation)
Sum-of-parts (SOTP) valuation values each business segment of a conglomerate separately and aggregates them, while relative valuation benchmarks a company's multiples against peers; each approach fits different situations and both are widely used in Indian equity research.
Sum-of-the-Parts Valuation (SOTP)(SOTP)
Sum-of-the-Parts (SOTP) valuation is a method of valuing a conglomerate or diversified company by separately valuing each of its distinct business segments or subsidiaries and aggregating those individual values to arrive at a total enterprise or equity value.
Sustainable Growth Rate(SGR)
The Sustainable Growth Rate (SGR) is the maximum rate at which a company can grow its revenues and earnings without altering its financial leverage or issuing new equity, funded purely by retained earnings.
Switching Cost Moat(Customer Lock-In)
A switching cost moat exists when customers face significant financial, operational, or psychological costs to replace a supplier's product or service with a competitor's, allowing the incumbent to retain customers and sustain pricing power over time.
Take Rate(Platform Commission Rate)
Take Rate is the percentage of Gross Merchandise Value that a marketplace or platform retains as its own revenue, reflecting the platform's pricing power, competitive positioning, and monetisation efficiency.
Tangible Book Value(TBV)
Tangible Book Value (TBV) is the net asset value of a company after subtracting intangible assets such as goodwill, patents, and brand value from shareholders' equity, representing the hard, physical assets attributable to shareholders.
Terminal Value(TV)
Terminal Value is the estimated value of a company's cash flows beyond the explicit forecast horizon in a DCF model, representing the assumption that the business continues to generate cash flows indefinitely at a stable long-term growth rate.
Utilisation Rate(Billing Utilisation)
Utilisation Rate in the context of IT services and consulting measures the percentage of billable employee hours actually deployed on client projects relative to total available hours, directly influencing gross margins and profitability.
Valuation Comfort Zone(P/E Band Analysis)
A valuation comfort zone defines the historical price-to-earnings or price-to-book band within which a stock has typically traded, using mean, standard deviation, and percentile analysis to assess whether current valuations are expensive, fair, or inexpensive relative to the stock's own history.
Weighted Average Cost of Capital (WACC)(WACC)
Weighted Average Cost of Capital (WACC) is the blended rate of return that a company must earn on its overall asset base to satisfy all its capital providers—equity shareholders and debt holders—proportionally weighted by the market value of each component of the capital structure.
Working Capital(Net Working Capital)
Working Capital is the difference between current assets and current liabilities, representing the short-term liquidity available to fund day-to-day business operations.