What is Fundamental Analysis of stocks?
Fundamental analysis is study of various parameters of companies, sectors and overall economy. This analysis helps in determining the inherent strength or weakness of the company business, sector opportunities and progress of the economy. Only fundamentally strong companies perform better in long run and have least risk of capital erosion/destruction.
Some of the examples fundamentally strong companies are Asian Paints, Pidilite industries, Bajaj Finance, Hindustan Unilever, TCS, Infosys etc.
How to identify companies with Strong Fundamentals through Fundamental Analysis?
Fundamental analysis of a company involves following.
1. Business model of the company
2. Company Performance on various parameters shown in Balance sheet
3. Study of various financial and performance ratios
4. Sector headwinds/ tailwinds
5. Management Integrity and Performance ( Corporate Governance)
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