Einstein said the power of compounding is the eighth wonder of the world. One who comprehends it gains cash and one who does not, pays it, said Raamdeo Agrawal, 59, JMD & Co-Founder, Motilal Oswal Financial Services is a distinguished stock market investor who made a fortune of 1000 Cr starting from nothing.
Raamdeo Agrawal is a mind behind mainstream riches creation examines the report of Motilal Oswal. With regards to speculation, he completes a ton of research in regards to organizations and different things
Raamdeo Agrawal has got a great investment skill to identify future multi-bagger stocks. Raamdeo Agrawal is a self-made millionaire with an asset worth 1000 Cr.
Raamdeo Agrawal was born in a middle-class family. He was living in a town in a remote place where there were no power and legitimate streets. After completing regular education, Raamdeo Agrawal decided to study chartered accountancy in Mumbai. Raamdeo struggled a lot and took five years for the completion of chartered accountancy.
During his study, he met Mr.Motilal Oswal. They teamed up and decided to enter the stock market after completion of a study. They established “Motilal Oswal” sub-broking firm in 1987. From small sub-broking firm, Motilal Oswal has become a big financial service provider today.
Mr.Raamdeo Agrawal made a lot of money from the stock market as he is extremely good at selecting a stock. He is an analyst and value investor, his first multi-bagger stock pick was Hero Honda in 1997. Looking for an upcoming business opportunity in motorcycle business he invested in Hero Honda stock. Hero Honda has to turn out to be first multi-bagger stocks for him.
The next choice of Raamdeo Agrawal was Infosys in 1998. Wherever he might see a chance of a world Y2K boom. The journey continues with a stock choose of Airtel, wherever a chance was known for mobile business.
Mr. Raamedo Agrawal is extremely generous once it involves sharing data. He shared his mantras of finding multi-bagger stocks for the investors.
Cash flow of the company operating cash flow and free cash flow of company should be positive. Cash flow indicates profitability of the company. In order to know cash flow, you need to study cash flow statement of the company. If cash flow of the company is healthy go for it.
The Return on Equity (RoE) is an important parameter for the selection of stock. The RoE of the company should be minimum 20%. You should never look at a company with low RoE. In addition to that RoE of the company should be increasing. It should not be declining or stand still. RoE indicates that company is allocating proper funds and generating better returns.
Check the longevity of the business. How long business growth story will continue? Predicting longevity is a pure judgment based on experience. Can the stock be next McDonald where franchise demand will continue forever or it will be like kingfisher airlines disaster?
The second thing which is important for the stock selection is Terms of Trade. Check if the company is able to trade the product with cash on delivery or prepayment basis. The credit period indicates demand and strength of products.
A company that offers long credit period indicates that demand for the product in the market is low as a company has to tempt the buyer to purchase the product by giving long credit period. On the other hand, a company with prepayment product indicates that buyer is ready to pay money upfront to purchase the product and competition is less.
Check if the company will be able to withstand the competition in the market or not. If a company is generating good revenue it is likely to face big competition, but there is an entry barrier or monopoly product it will rule the market.