DCF of Manappuram Finance is 10x its price

#1
Hello,

Fundamental analysis is still new to me.

I recently started calculating the DCFs of companies.

One company I noticed with a very high DCF value when compared to its price is Manappuram Finance.

Why has this company's share price dropped in value since November 2010? Was its price over its intrinsic value in November 2010 or was there some major fundamental reason for the price drop from 90 INR to 10 INR.

Edit: I just saw that free cash flow was negative in 2011 and 2012, I guess this stock may be only worthwhile to look at if 2014 free cash flow stays positive.
 

Einstein

Well-Known Member
#7
you first need to develop a criteria of a good company and invest only in such companies.

This is called 'circle of competence'. doesn't matter how big the circle is, the important thing is to stay inside that circle.
 
#8
@Einstein, lately I had the idea to invest only in large caps but after discovering how to do DCFs, I decided to widen that circle. Now I'll work on how to decide what is a good company. So far I have:
- Positive Free Cash Flow
- Less than 0.8 Debt Equity Ratio (Just added today after reading some discussions on google plus)
 

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