Thread 🧵explaining #ROE & #ROCE and its use in #FundamentalAnalysis

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#FundamentalAnalysis #StockMarket

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Return on Equity (#ROE) and Return on Capital Employed (#ROCE) are two important Financial Ratios used in #FundamentalAnalysis of Stocks.

#StockMarket #Investing

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Return on Equity (ROE) is the ratio of Net Income (Net Profit) of a company and it’s Total Equity (Shareholder's Equity).

Here - Shareholders Equity = Share Capital + Reserves & Surplus.

#StockMarket #Investing #FundamentalAnalysis

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#ROE is a measure of how much net profit a company is making for every rupee invested by its shareholders in the company.

It can be said that higher the ROE, better it is for the equity shareholders. It tells shareholders about how effectively their money is being used.

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However, you should not trust high ROE blindly. Biggest drawbacks or weaknesses of ROE is that it completely ignores debt.

Hence for companies having high levels of debt, ROE will give a higher but misleading value & therefore we need to look at #ROCE along with #ROE.

Poor Investors often disguise inexperience with arrogance. Rich investors disguise experience with humility. The richest person in the room is usually the quietest one in the room. The poorest person in the room is usually the loudest one in the room.

@48_quotes Problems with being/appearing Perfect:

1. Your peers & friends envy you.
2. Your enemies hate you further.
3. Your productivity goes down.
4. Your stress increases.

Late aaye durust aaye #OmkaraEdge

Omkara covered this co with clients long back with proper DATA/ NUMBERS

Sugar stocks are a natural hedge against daru.

As ethanol blending increases, ENA prices will go up as so will the cost of your daru 😂😂

Phir bolna nahin ki bataya nahin

"CREATE A VACUUM

Women are like cats. They don't chase strings they already have. They chase strings that could disappear.

Women are more MOTIVATED BY FEAR OF LOSS than promise of gain.

Give value; then create a vacuum."

Get CCM:

Everyone is a genius in a Bull market. Don’t confuse luck with skill .

@48_quotes Success creates frenemies. Be watchful who you hang around.

Only a minority can succeed at the game of life, and that minority inevitably arouses the envy of those around them.

Once success happens your way, however, the people to fear the most are those in your own circle, the friends and acquaintances you have left behind.

Amongst other performance details, what we miss out while selecting an actively managed mutual fund is the AUM.

In equity, moderate the better. In debt, higher the better.

#investing

@varinder_bansal But we have surplus sugar production, ethanol plants are yet to come up. Policy of increasing the ethanol blend is announced. But infrastructure is not ready. Last year's huge stockpile in godown. Farmers not paid FRP in many states.

Sugar industry is poised to change drastically over the coming years from cyclical to structural.
We can fall in the footsteps of Brazil which produces ethanol and sugar equally from sugarcane and reduce the overcapacity issue of industry.
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Let's first understand how a sugar factory works:
Sugarcane is crushed in a sugar factory that primarily extracts sugar syrup and fiber which is called bagasse. Bagasse is used to generate electricity, the excess power generates is then sold to the electricity companies.

Sugar syrup is then boiled to extract sugar, the syrup can be boiled up to three times to extract maximum sugar, and the residue left is known as molasses
Molasses can be further processed to generate ethanol and alcohol

The sugar syrup if being boiled twice generate B heavy molasses which has more sugar content hence can generate higher ethanol, the syrup boiled three times leaves C heavy molasses which has very low sugar content having lower ethanol yield

Ethanol can also be extracted directly from sugar syrup without making sugar, this leads to the highest ethanol yield and also fetches higher ethanol prices in the market.

Sugar Industry Insights (Feb 25, 2020)
Last few years sugar industry has been a beneficiary of government largesse. Sugar cycle turned in 2015. Post that there has been surplus production.

Government has helped the industry by various incentives like export subsidy, ethanol blending, allowing cane juice to ethanol conversion, msp, etc. UP and Maharashtra are the 2 major states in sugarcane plantations.

The 2 largest players in the world are Brazil and India. In Brazil sugarcane is used for ethanol a lot lot more than in India. Brazil is way ahead of any country in ethanol from cane.

US is the largest producer of ethanol in the world followed by Brazil. US uses mainly corn for making ethanol.

Indian sugar scenario: Sugar still constitutes 85% of revenue in sugar companies. So, essentially it has to do well for sugar companies to be profitable. We have had record production in last couple of years. Sugar opening stock at end of last sugar year was 14.5 mt.

Be careful if you hear tips asking you to buy DHFL. The nclt has approved the resolution plan, where I believe the plan is for the shares to be written off to zero. Piramal will then get new shares. Today's shares will have zero value, beware.

Please read:

Meanwhile, today, 21 lakh shares traded at upper circuit. This will do good as a coin - DHFLCOIN - and go to the moon.

Sugar was once promoted in newspaper ads as a healthy snack that helps save calories and prevents obesity.

Oh, how the tables turn.