Day 9: Journey to wealth creation and humble life | Return simulation | x to 1000x

With more time spent on learning about the Mr. Market, I have, for now, have put together a simple simulation using the concepts I have learned from the book by Manoj Arora and Dr. Vijay Mallik's calculation.

1. Sales CAGR for 3, 5 and 7 years is > 10%

2. Net Profit Margin CAGR is growing y-o-y.

3. Calculate the SSGR and check whether it is quite higher than the Sales CAGR.

4. P/E shouldn't be highly expensive, try to be less than 30-40.

5. Calculate the intrinsic value using the following

   1. Price to Earning Growth (y-o-y)

   2. Earning per Share (EPS) growth.

   3. Intrinsic value = (Current PE (1 + PEgr%) x Current EPS ( 1 + EPSgr)

   4. Current Market Price should be atleast 25% less than Intrinsic Value.

6. Read all latest annual reports, ratings by CRISIL, FITCH, CARE etc to guage the overall credit ratings and business direction.

7. And ofcourse promoter shareholding pattern.