I Mahesh Chander Kaushik is an Investor of Indian Share Market.
I am a NISM Certified SEBI Registered Research Analyst My Reg no. INH 100000908
I Share My Research Reports with Other Investors as a Free Service and Hobby.
This Blog Publish Research Reports for 3 Day to 3 month Positional Delivery Buying. ( Not Usefull for F&O and Intra-day Margin Trade)
This Blog Not Give Investment Advice Read Disclaimer Before Follow any of My Stock Idea.
Stocks that trade at a discount on their book values are bargains (undervalued) or not ?
Please suggest for buying share, we should consider 'Book Value'. It should be less than CMP or not.
There is no any chapter in book about book value except for calculation in fundamental TP.
Please suggest is it necessary to see individual book value of share except TP calculation. Ask by Ashwani Kumar ( registration number 13145).
1.Sorry for late reply because I am busy on my NISM-Series-XV: Research Analyst Certification Examination and happy to annouce that I am passed this exam with 67 % marks.
2.Book Value of a company is the net-worth of the company. To compute book value per share,
net-worth of the company is divided by the number of outstanding shares.
3. If we take it in simple terms, book
value per share means the theoretical amount of money each share would get in case the
company business was to wind up.
4.I am not use book value as my research criteria because the realizable value of company assets may be different from book value and is never known with
5. Some of analysts use price-to-book value ratio (P/BV)
which find price relative to the value.
6.The P/BV measures a company's current market price (CMP) vis a vis its book value.
7. An important limitation of this number is that most
assets on the books of the company are shown at their historical cost less depreciation and not
their realizable/liquidation value.
8.P/BV less than 1 indicates the company is trading below its book value, and hence the stock is
deemed to be undervalued.
9.However, it is pertinent to ask, ‘why is the market pricing the share
at a price less than BV?’ Please note that there may be several reasons for a stock being available
for less than its book value including the poor investments made by the firm in the past which
need to be written down subsequently.
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