How to Identify Fundamentally STRONG Stocks using the FRAGILITY Scorecard | Stock Selection Strategy

[@arjunbharti8948]

Everytime I watch your video, I become more humble and realise that there are lot of things for me to learn about investing. Thank you so much from the core of my heart for every video you upload😊

[@shankarnath]

Happy to hear that! Wishing you the best

[@KirtiRanjan]

This video is a gem and brings in different aspect towards value investing. But since there are no stock recommendations, it isnt glamourised and many would miss it.

[@shankarnath]

Thank you very much! Glad you liked it

[@unnista2]

@@shankarnath hi sir @6:44 how come 12k crore/ 15% gives 85k crore

[@shankarnath]

@@unnista2 12,736 crores divided by 15% equals 84,907 crores. The formula is (Interest + Depreciation) divided by EBITDA Margin

[@AnilSharma-jc9cn]

Very well articulated video Sankarji! Thank you!!

[@shankarnath]

So nice of you. Most welcome

[@hemanthkaja]

shankar ji, new concepts presented in a lucid manner. Thank you and Mr. Ramachandra Gupta for bringing this perspective of analysis.

[@shankarnath]

Most welcome Hemanth ji, glad you found it useful

[@jagannathdas4568]

Good research by my friend Mr Ramachandra Gupta. Good presentaion by Mr Shankar.

[@shankarnath]

Thank you very much!

[@subratarana118]

The video content is great as usual. What differentiates you sir from other youtubers is the fact that you share the research results in a summarized worksheet to ease our work. Thanks a lot!

[@shankarnath]

I appreciate that! Thanks for the kind words 🙌

[@satyaprakashchoudhary6957]

Ohh Shankar!! hats off to your research which helps a lot of people. Thanks

[@shankarnath]

Most welcome! 🙌

[@dubarisharma884]

Really impressed! This is, perhaps, the most valuable video from your side that I have viewed...Thanks for such a valuable input..

[@shankarnath]

Most welcome. Glad it was helpful!

[@sabarishgs7057]

Been watching your videos for few months and it is truly enlightening! Learning is so much fun with you ,Sir👍🏻

[@shankarnath]

So nice of you. Happy to know the content is appealing to you and you're finding it helpful. Thanks!

[@parthaprateemraychoudhury7689]

Learned a new concept to identify and analyse companies in terms of fragility score for long term stability for my portfolio. Thank you Shankar ji for sharing innovative terms on the way to be a smart and logical investor. 🙏

[@shankarnath]

Most welcome Partha ji. Glad you found the video informative

[@baludharmarajan2104]

Excellent video. I have added in my process of selection.

[@shankarnath]

Glad it was helpful! 🙌

[@sonasharma2439]

U r a genius and a stroke of luck for aspiring investors/learners students.. Investments, not only seems a daunting Excercise for us new investors but also scary cause if not understood well or made an error ,it cn cause severe injury damages etc The subjest is so vast n somany concepts are related .in such a complex scenario,coming across some one like u who not only educates generously but also meticulously n systematically guving so much of conceptual clarity n motivation toncontinue on the path of learning b4 earning. V definitely need a systematic roadmap to fundamentally analyse the company,a checklist etc with the right correspondong n easy app or resource to use per step.noone has that kind of clarity like u have to simplify complex concepts.thanks a million for sharing ur education & ur empowering knowledge 🙏

[@shankarnath]

Glad you are finding the videos and the content helpful 🙌

[@patelmukeshb]

Shankar u r so Simple and quality content maker...watching u since long (on ETM)

[@shankarnath]

Thanks a ton for your continued patronage and kind appreciation 🙌

[@sushantpradhan8216]

Sir learning from your videos is a blessing.❤

[@shankarnath]

Glad to hear that & I'm happy to be playing a small part in your financial journey

[@SacchiListener]

Learned something worth new today! Thanks to you!! Your way of simplification is just subtle! Really appreciating the efforts and grateful to have you on KZbin! ✨

[@shankarnath]

My pleasure 😊 ... thanks for the kind words

[@MrSmartphoneWorld]

In few years you are going to change life of many people for the content you provide that too absolutely free. ❤️

[@shankarnath]

Thanks 🙌

[@abhi13sharma123]

It's top content Shankar. Thanks a lot.

[@shankarnath]

You're most welcome

[@yathartam]

Really great to watch your videos and it is very useful for all the investors 🎉🎉🎉

[@shankarnath]

Glad you like them! Thanks

[@Anbu-Ini]

Thanks for the wonderful content, Shankar Sir

[@shankarnath]

Most welcome, glad you liked it

[@jegr6607]

Awesome info, learned something new. Thanks!

[@shankarnath]

Glad it was helpful!

[@sonuoliver]

Thank you Shankar Sir!

[@shankarnath]

You're most welcome

[@rajeshasher9769]

Very Innovative indeed, thanks

[@shankarnath]

Most welcome 😊

[@jillellasaibharathchandra6901]

Sir, your explanation is top notch... Please make video on filing ITR with live demo🙏

[@shankarnath]

Thanks for your appreciation and suggestion

[@somnathhazra4488]

Learned something new today, it was quite a complicated framework but you did a great job as always to keep it simple. Thanks a lot for teaching us…👍🏼

[@shankarnath]

Great to hear! In the last few months of doing this, I figure every concept has 1 or 2 key ideas .. the same applies to industry/sector analysis aswell. Happy to know it's working

[@atulmishra2824]

you bring superb content...very impressive delivery also...kudos

[@shankarnath]

Thanks a ton. Glad you liked it 🙌

[@arvindmahajan]

Thanks for the quality content. 💥💥💥💐

[@shankarnath]

My pleasure! 🙌

[@raghavgupta1537]

How so good videos always sir, amazing work!

[@shankarnath]

Thank you Raghav, glad you are enjoying the videos

[@praveenbanakar3054]

Thank you for your time

[@shankarnath]

Most welcome

[@avgang99]

Amazing video sir !

[@shankarnath]

Thanks a ton

[@nabeelyahiya]

Excellent video Really enjoys such videos❤

[@shankarnath]

Thank you so much 😀

[@naveenkumarkaranam2799]

Thanks for the simplification and really inspired with the way concepts are simplified. Its my privilege to subscribe to your channel and can not thank you enough for all the stuff you are posting

[@shankarnath]

Most welcome Naveen .. and thank you very much for your continued support and appreciation!

[@watstherumour7134]

Awesome presentation as always 🎉

[@shankarnath]

Thank you very much

[@saumimitra7105]

Your videos are informative, eye opening!

[@shankarnath]

Glad you like them! Thank you

[@prashantkavitake4570]

Thanks for such videos 😊

[@shankarnath]

My pleasure 😊

[@santhoshvellingiri9562]

Wonderful explanation

[@shankarnath]

Glad it was helpful!

[@inigob.s.6990]

I learnt new concepts. ❤

[@shankarnath]

Glad you found it useful

[@mayanktiwari2498]

Looking forward to using fragility scorecard in my research!! Thanks Shankar for this!

[@shankarnath]

My pleasure! Glad you found it helpful

[@mayanktiwari2498]

@@shankarnath An off topic question, could you please tell me if I switched my money from one MF to other using EOPs like groww, then will I be taxed (6 months old portfolio) for any gains from my earlier MF gain?

[@shankarnath]

@@mayanktiwari2498 Yes, a switch means a sale .. so capital gain (or loss, as the case may be) will apply

[@mayanktiwari2498]

@@shankarnath Got It Shankar! And assuming there isn’t any way to bypass the taxation!

[@sreejaysreedharan4085]

I guess these are the core of core fundamentals . Very nice...

[@shankarnath]

Glad you found it useful

[@mathavaprakashA]

Great. Keep up ur Good work

[@shankarnath]

Thanks 🙌

[@samradalpha]

Awesome video.

[@shankarnath]

Thanks!

[@anubhabdutta2625]

Hi Shankar ji, your prospect of seeing investing is just brilliant. I just have one question, based on the Fragility score card sun TV network should have been a better performer compared to L&T, but in reality the story is different in terms of Stock price movement, why so?

[@shankarnath]

Thank you very much, Anubhab ji. "Fragility" simply explains the probability of failing and it should not be construed as a proxy to performance at all. Think of it like adding more steel, weight and sturdiness to your car (like an Ambassador) .. but that has nothing to do with performance. The performance of that Ambassador travelling at 120 kmph will depend on the engine inside it (which I think needs to be a lot more than the 1,489 cc engine the car came in)

[@parthaaec07]

One of the best video. Learnt good stuffs. That breakeven sales is an important milestone companies follow closely. Numerator in break even formula add SG&A overhead ? Although you said its crude method but still.

[@shankarnath]

Glad it was helpful!

[@ohno_ohno_ohno]

A really interesting video! :)

[@shankarnath]

Glad you liked it

[@user-fo7by6co7p]

Very nice, informative, and simplified

[@shankarnath]

Glad it was helpful! Thanks 🙌

[@user-fo7by6co7p]

@@shankarnath However wondering, then why investors put a good sum in such stocks. I am sure, these are not retail only driven. Cyclic too... Not sure how exactly it works. Plus these days lots of buzz stating this decade will be of capital goods, infrastructure, engineering companies. As they were literate idle in the past decade as per my understanding from the news

[@shankarnath]

​@@user-fo7by6co7p Maybe our biases have to do something with it. High dividend yield has a natural recency bias. As we are optimists at heart, we feel the high will get higher .. which doesn't work as well in this case.

[@user-fo7by6co7p]

@@shankarnath True :) Shankar, thanks for the prompt reply

[@TheYasinsonu]

Hi Shankar, Thanks as always! One suggestion, Could you please make something on 'How to read Banks Quarterly Results statements', because I find these are somewhat different from others.

[@shankarnath]

Thanks for the suggestion

[@dheerajkukal8475]

big fan, shankar sir.

[@shankarnath]

Thank you!

[@SasiGudla]

#METoo

[@maheshwarbanuk4389]

Great! What types of companies or industries are most suitable to apply these metrics? In your example you have chosen Construction and Media; can these be applied equally to other industries for example emerging industries like Energy and renewables, IT & AI (example of Alphabet?!), financial services, and others. I guess, for capital-intensive industries, these metrics would defiantly help to identify a sound and stable company.

[@shankarnath]

The scorecard can be used on a range of companies but leans more on product and service companies with moderate to heavy asset base. Ofcourse, given the range of products & services, some tweaks (additions and deletions) will be needed depending on the industry & sector. Some of my sector analysis videos can help in that regard

[@chandankathal]

Great content! One feedback though comparing companies on any metric makes more sense if they are from the same sector. Comparing sun to a zee or l&t to any other infra company would have been more appropriate. Infrastructure business will always have more debt. So how l&t is more or less fragile with respect to its peers would have been more interesting I guess. Thanks as always for great learnings.

[@shankarnath]

Most welcome & thanks for sharing your views

[@antartica3187]

@Shankar Good video. Where do you purchase your T-Shirts?

[@shankarnath]

Thanks! Not sure on the T-Shirts, it's been a couple of years since I bought them.

[@ashokdharmaraj1551]

Excellent content. Appreciate the effort you put in each video. its a masterclass in stock analysis! Thank you. As you always encourage us to do DIY stock analysis, I applied three of the four criteria (except the break even one, which I didn't apply) on Aavas finaciers Ltd. and all were negative! But most of the brokers have given a strong buy, add or hold call for this stock. So is there something apart from past performance that we should look while analyzing a stock ,like the sector which it belongs to, change in corporate governance or some other event that happened recently. Thanks

[@shankarnath]

Thank you very much for the appreciation. The fragility scorecard will not work for financial companies. For instance in the case of Aavas Financiers: 1. As a housing finance company's business model is based on leverage, the equity % will be a small part of the borrowings -- so this fails but it is irrelevant 2. As explained in earlier videos aswell, return on capital employed is not to be used in case of financial companies and is irrelevant 3. And finally, with re: the CFO multiplier, again it doesnt work for financial companies as the business model of these companies is a lot different. May I suggest you read more on this on the Internet (via a search engine) because it is an important point to learn and understand

[@bakiojaskar478]

Sir can you make a video on warren buffet way of valuation with example.

[@shankarnath]

I'll try, thanks for the suggestion

[@ShivaAttry]

Hi Shankar, is this scorecard also applicable to Banks?

[@shankarnath]

No Shiva. This one doesn't apply to financial companies

[@sakthivelr5631]

Nice video. We need a video on “where and how to invest in a bull run. Now that market is heading all time high, should an invester even invest in a bull run? Need a video on both stocks and mutual funds aspect. What if we miss and market keeps hitting new highs” highly confused! How to tackle such situations!

[@shankarnath]

Hi, I already have a video on this. Pls watch: kzbin.info/www/bejne/lZ-3lZakmrGAodE

[@sakthivelr5631]

@@shankarnath thank you so much. The video was indeed awesome!

[@nitmat14]

Thanks

[@shankarnath]

Thank you Nithin for this wonderful gratuity and for your kind appreciation. Happy to know that this video was helpful. Simple rules but an effective layer of check before investing in any company.

[@nitmat14]

@@shankarnath I wanted to check my folio with this now which will help. But do we have a tool for this?

[@shankarnath]

@@nitmat14 Oh, I don't think there's a tool yet. Mr. Vinnakota's website (under development) is expected to have this fragility score for over a 1000 companies. That'll help us all, I'll circle back once he releases the portal.

[@abhikkumarjha]

Hi Shankar, thanks a lot for sharing this. I tried creating this on trendlyne screener: Market Capitalization in Cr > 100 and ( ( Interest Annual Cr + Depreciation Cr ) / Operating Profit Margin Annual % ) / Total Revenue Annual Cr < 0.3 and ( Cash from Operating Activity Annual Cr ) / ( Interest Annual Cr + Depreciation Cr + Long Term Debt Annual Cr * .2 ) > 4 and ( Equity Share Capital Annual Cr + Total Reserves Plus Surplus Annual Cr ) / ( Total Current Liabilities Annual Cr + Total Non Current Liabilities Annual Cr ) > 0.9 Does this sound right to you?

[@shankarnath]

Hello. I don''t have a viewpoint on this because as per Mr. Vinnakota, the fragility scorecard is not a screening methodology (shortlisting) but is based on giving a score to each and every stock (well, it excludes financials though). In the above query, you have taken specific numbers like 0.3, 4, 0.9 etc. while the fragility scorecard is more dynamic and deals in percentiles.

[@dheerajupadhyay2649]

Gold Content. Boss Man! 🙏

[@harshitbansal1356]

Sir can you please tell the source from where you have collected the data for your excel sheet?

[@shankarnath]

Hi. Mr. Vinnakota would be the right person to answer this and he should have written about it in his blog. I think he has used screener.in

[@sanoojs4508]

I didn’t understand the part that a high ROCE means company is fragile- if ROCE is higher than ROE means company is utilizing the Employed capital more efficiently right?

[@shankarnath]

Can you share the timestamp where is says high ROCE is fragile?

[@sanoojs4508]

My apologies, it’s saying NOT fragile at 7:41 . Thanks Shankar

[@shankarnath]

No worries, most welcome

[@arulmuruganK94]

Pls put a video on books / course for doing fundamental analysis

[@shankarnath]

Thanks for the suggestion, I'll try

[@ashishasati]

Sir your experience and explanations too High... profitable...

[@shankarnath]

So nice of you. Glad you liked it!

[@sukanyachoudhury6174]

Thanks mr. Shankar for the informative video. Could you please also make a video on the new exchange only platform (EOP1 and EOP2) regulation for mutual funds from groww , zerodha , angelone and other brokers? How is this going to impact retail investors who invest in direct MFs through these brokers? Is this regulation going to increase expense ratios of direct MF? Please let us know

[@shankarnath]

Thanks for the suggestion. It's too early to say but on the face of it, direct expense ratios may increase a bit to cover EOP costs

[@gunjanbelwanshi]

Murphy's law: Whatever can happen, shall happen. Sol: One should diversify

[@niladribhaumik5128]

Pls do share the google sheet

[@shankarnath]

Please check the video's description

[@HarshitaVerma-d4n]

sir, please suggest the better option for 15 years investment option first- investing in smart SIP in Kotak small cap or HDFC small cap for 15 years. option two- investing in a debt fund in UTI mutual fund and switching to UTI 200 momentum30 when the market is low PE. considering the effect of various charges and expense ratios. regards

[@vjay04]

I think first indicator (equity as an % of total liabilities) not to be more concerned one when the company has an good percentage in return on employed. Let me tell you how it works Suppose x company has an good business idea for this it has borrowed (assume 10 %debt) 100rs and invested in the business and it gave 120 rs now company said to be operated efficiently and got an surplus of 10rs after having sufficient funds (110) to repay it's liabilities. AS LONG AS COMPANY HAVING GOOD BUSINESS OR INVESTMENT OPPORTUNITY ( WHERE RETURN ON CAPITAL EMPLOYED IS MORE THAN COST OF DEBT) FIRST INDICATOR IS NOT SO IMPORTANT I THINK SO. IT'S ALL TRADING ON EQUITY CONCEPT. however I learnt something new from this video (last indicator CFO as multiplier). Thanking you sir

[@shankarnath]

Thanks for sharing your opinion

[@hardy2175]

Fragility is how you will perfirm when you hit a bump.

[@investment120]

❤❤

[@sumeetsheokand8886]

sir make excel template with screener so we can use it practically export excel function it will be more helpfull i think just suggestion

[@shankarnath]

Thanks for the suggestion

[@gpatel]

You should start a smallcase

[@shankarnath]

I'm not keen on getting into fund management. It's cluttered and its too much stress. Instead I prefer to be an educator - there aren't many in this area.

[@gpatel]

@@shankarnath Agreed. Let things move on a slow pace then.

[@focus15624]

Sound Volume is low.

[@nikhiljain2214]

For l&t long term borrowing is 61218 cr not 120650 cr

[@hardy2175]

Comparing an ICT with an infra company is not fair as the cashflows are completely different. But when times are bad stay away from infra.

[@vinaytm]

Great video and kudos to Ramachandra Vinnakota sir who has done this research. These ratios should be taken with a pinch of salt and people should understand what's the idea behind each ratio and how it shapes the balance sheet quality of a company Most of the current liabilities a company has are trade payables and franchising fee etc (these can't be negative as all good cos keep other people's money with him for 80-90 days. Ex - Nestle, Lever etc. It may not be ethical but that's how the world works). High Equity/Total liabilities should be studied for each company. Concluding anything is difficult Similarly, the assumptions taken for breakeven sales is way too generic. I think the best way to find out this breakeven sales for a company is to study the June 2020 results as most companies had negative margins due to higher fixed expenses and lower than expected sales due to covid lockdown ROCE has proven to be a superb metric to know about the quality of a company time and again. I don't see much real-life utility for the CFO multiplier since it just shows higher cashflow from operation against interest+dep. This will be higher for low capex/low working capital business

[@shankarnath]

Thanks for your kind appreciation and for sharing your views!

[@nityaranjantripathy279]

Surprisingly Sun Tv has given 0 return to its investors !

[@nagarajuaddagulla]

I might be wrong SUN TV is a Political party company and numbers might be incorrect and can happen anything anytime

[@hardy2175]

Sun TV is politically very exposed. That is a big fragility.

[@SrinivasPaulraj]

Sir It is very easy way to do fundamental analysis for beginners like me can you please do this analysis on LIC. I tried but I didn't get any relative ratios. If possible share your mail id or something so that i can show what I got. Mikka nandri.

[@shankarnath]

Hi. I did a life insurance sector analysis covering LIC and other listed players. Pls have a look: kzbin.info/www/bejne/p5qmdJ1vaJuhb6c