What is Fundamental Analysis?
                     What is Fundamental 
Analysis?
Introduction 
Fundamental analysis has been one of the most rewarding analyses in the history of stock 
markets. In fundamental analysis, you evaluate a security by using economic, financial, 
qualitative and quantitative factors to determine its intrinsic value.
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Factors
It is believed that macroeconomic and microeconomic factors can affect a security’s value. 
These factors can be economic conditions, industry conditions, financial conditions and 
management’s proficiency. 
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Main Motive
The main motive while doing a fundamental analysis should be to evaluate a security’s 
intrinsic value and compare it with the current stock price of the security, thus determining 
if the security is undervalued or overvalued.
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How to do Fundamental Analysis of Stocks?
Understand the company
It is very important that you understand the company in which you intend to invest. It will 
give you further insight as to how the company is performing, whether the company is 
taking right decisions towards its future goal, and whether you should hold or sell the 
stock. 
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Study the financial reports of the company
Once you are done understanding the company, you should start analysing its financials 
such as balance sheet, profit-loss statements, cash flow statements, operating cost, 
revenue, expenses etc.
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Check the debt
Debt is an important factor - one which can bring down a company’s performance. A 
security cannot perform well and reward you if it has a huge debt of its own.
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Find the company’s competitors
The company you want to invest in must be one of the best among its peers. Try to find a 
company which is performing better than the other companies. It should have better future 
prospects, upcoming projects, new plant etc.
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Analyse the future prospects
Fundamental analysis is most effective when you want to stay invest long term. Invest in 
those companies whose product will still be useful 15-25 years down the line.
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Review all the aspects time to time
Do not invest in a company and forget about it. Stay updated about the company you have 
invested in. You should be updated about all its news and financial performance. Sell the 
security if there is a problem in the company.
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