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| Grading >>EQUIGRADE >> Framework |
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| Fundamentals |
Whether the company is fundamentally sound with respect to its business, its financial position, its management & its prospects |
| Valuation |
What is the Current Intrinsic Value (CIV) of the stock & how it compares vis-a-vis its Current Market Price |
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| Fundamental Grading |
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The analytical framework of CARE's fundamental grading methodology is divided into five segments:
- Industry fundamentals and its prospects
- Business fundamentals of the company and its prospects
- Financial soundness of the company
- Management capabilities – qualification, experience, investor friendliness, execution track record, etc.
- Corporate Governance practices
Thus, both the qualitative as well as quantitative aspects are considered while assigning a fundamental grade for the company.
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| Valuation Grading |
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| The analytical framework of CARE's valuation grading methodology is primarily focused on arriving at CIV of the company. CARE shall adopt various valuation methodologies, including Discounted Cash Flow (DCF), Price-Earnings (P/E) Ratio, Price-Book Value (P/BV), Enterprise Value-EBITDA (EV/EBITDA), Net Asset Value (NAV), replacement value, etc which it feels is the best suitable for determining the CIV of equity shares of the company. In case of multi-business or multi-segment companies, CARE may also adopt an appropriate mix of various valuation methodologies so as to arrive at the CIV based on Sum of The Parts (SoTP). |
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