Welcome you all formally to this amazing batch of basics of stock market. Let me give a quick introduction about myself first and then we'll move on with the topic. Okay. CA Rachana Ranade, naam toh sunai hoga. Okay. So I cleared CA in 2008, November. So, I'm sure you know that the result comes out in January 2009. So this year marks 10 years of me becoming a chartered accountant. So I thought why not take one step ahead and peek into some area which I've never taken as a proper formal session. So that was the reason why I thought of taking this small course on basics of stock market. Did I take a sudden jump into this? The answer is no. I am also a resource person of a government organization wherein I have taken more than 100 sessions on investment awareness. And two sessions are very close to my heart because one was for CID Pune. CID means proper CID of Pune. And second one was for Indian Army Southern Command. After having a word with so many participants through more than 100 sessions, of course, I've taken a lot of corporate trainings as well in the same area. But then I talked to so many people and I found one thing which was almost very much in common that everyone knows that there is a stock market. But if I ask them two or three questions, they might give me an answer, but it would be a very vague answer as such. They would not give me pinpointed answers. And so many people said that ma'am, there is content on YouTube, no doubt about that. But we are not, you know, there is different content on YouTube basically. There is no formalized content like this. That from the very beginning, like we study in school, A, B, C, D. If someone has studied like that, it will be fun. So I said, I am there. So then I thought that let us design this small course, should not be a big one. 10 days course and every day one and half hours okay so i thought we should start from the scratch in fact i got queries from so many chartered accountants also they said madam who have been my students sometime and overlooking morning may we have to go for college maybe they work in hinjavadi area and they say we leave at 7 in the morning how can we attend your batch at 7 30 in the morning said no problem we'll record it for you that is why this recording stuff also okay but then i said you're a chartered accountant Why do you really want to attend this basics of stock market batch? Believe it or not, I met so many CAs who are, some of them are more experienced than me, but they have not invested even one rupee in stock market directly on their own. Mutual funds se kya hoga, but not on their own. So I feel this is a very good platform if you don't know anything about the stock market to start from the scratch. and learn in a very systematic and standardized manner right okay any one of you already invests in market 1,2,3,4 very good and I am happy with that. Have you taken some shares because you are senior advised or you are broker advised? Yes, always. That is how even I started. Generally, our broker will tell you to buy this share. It will go up, it will go up. Who knows where it will go up? And many a times it happens that after giving some call it will actually go up and within no time it will actually crash like anything. So then why depend on someone else to take a buy or sell decision? Can't we study on our own? Yes, absolutely yes. So that is where we want to start from the basics and even if you know something about the stock market, I bet that after completing this batch, you will say that we did not know all this at least five six areas out of this and we are happy we are here and got to know about the basics right from scratch. Okay. Yes. I feel before building any building, what is the first step in before actually construction? What is the first step of construction? to see the area, okay? you should see the area, you have to decide to build a building here, what next? foundation, you have to do base layout but before doing base layout, you will find that the land is not even land might be uneven there will be some unwanted plants around you So first we have to remove all the unwanted things and then build a solid foundation. So these unwanted things which are in our mind about stock markets, we have to remove them first. You must have heard that the stock market is a game. Many people say that. It's a gambling game. So is it really a gambling game? Can we study it technically and take some good decisions? So the answer is definitely yes, no doubt on that. So this gambling game is not at all in our systematic manner, different myths in our minds about the stock market. You understand the term myth? Myth means what? Wrong assumptions. All these have to be removed from our minds first. Uneven land is to make it even. Unwanted plants to be removed from the side. That's how we are going to start. Okay. So let's go through one by one. We are going to start off with busting the myths of stock market. You understand bust? Bust means blow up. Hathau is called myths of stock market myths means what are your wrong assumptions about the stock market. So I've taken three major three to four if I'm not mistaken, major misconceptions about the stock market. The very first myth misconception is that investments in stock market are very risky. How many of you agree with this? Stock market investments are very risky. No one, but if you ask general people, everyone will say we don't invest in stock market because we feel it is very risky. Okay. Why do they feel it is risky? If you ask me personally, I feel yes, to some extent it is risky, but really is it risky or not for that? Just have a look at this chart. Okay. I am sure you might not be able to see all these small, is it visible? No it's not even visible very nicely for me. Don't worry. But what happens understand this is the performance of Sensex in the past. Have you heard about this term Sensex? Sunna? There is one more similar term to Sensex? Nifty. Correct. So what is Sensex? What is Nifty? We are going to go into that in detail. But first of all let us just have a quick look at this movement of stock market. this is way back in 1991 this extreme left is 1991 and this is 2018, till now I got the data now if you see here, all these small hiccups this is our uneven land, up and down could that happen in the short term? Could you, I mean, could there be a possibility that you buy a share and immediately after that it goes down? Possible yes or no? Yes absolutely yes. This is very much possible. But now have a look in the long run. What is happening in the long run? Is it growing? Has it steadily risen from, okay what is this on the Y axis? Here you can see 5000. What is this 5000? Sensex was at 5000. What is this 5000? Sensex was at 5000. What is this 5000? was below 5000 in 1991 and today any idea? roughly how much is it? 35000 roughly so from below 5000 in 1991 right now even if you see this is Jan 2018 its almost 35 we are in 2019 right now its around this so now tell me in the long run can you bet on the stock market yes why not but if you're talking about short term then be aware in the short term you can see lots and lots of ups and downs see this amazing area can you see that market was roughly roughly so maybe somewhere around 17000 okay cup roughly around 2008 beginning Something happened here and it went down below 10,000. You know what had happened in 2008? US crisis, subprime crisis. Have you heard about this? There was a big big big crisis in US. If you want I'll cover that in short in the upcoming session also. Have you heard about Lehman Brothers? Yes, that was a very big financial institution like we have ICICI. Like we have HDFC, all these are the big financial institutions in India. Similarly, there was a huge financial institution in India named Lehman Brothers. It declared bankruptcy overnight. Ratto rat bankrupt. So you can imagine something like this. HDFC pulls down the shutter today evening and tomorrow morning it doesn't open. And you can imagine so many people's funds are locked in that. It is a big thing to declare bankruptcy overnight. And when there is a problem, it comes in wholesale. So what happened there? It is a true fraud on its own. I am sure you might have heard about this also. Satyam fraud was again unveiled in this same time frame. So two major things coming right back to back. And you can imagine that the Sensex crashes from 17,000 roughly to roughly 8,000. 9,000 points on Sensex. It goes so low. Is that going to be a huge one? Yes. But please understand this point. Do you think it would have gone down and down and down and down? And everyone will say zero. Would it go down to zero? Never. Market can crash. It can come down. But there has to be somewhere, some area where it will at least start bouncing back. Okay. There will be some good news in the market. So once some news starts coming in, now we can see after some news, some stability came into the market. This was a reversal point. Then again market started to increase slowly and steadily. Here you can see some hiccups again. Now if you see here the main uptrend started. Which year you can see this is 2014. This time. So was Modi the one who said that now I am going to take stock market to 35000. No no no of course not. Then why? I mean what is the connection between Modi or NDA for that matter? National what? National Democratic Alliance. Correct. So this is a big version of BJP. So all these people came together, they came in power. And they came in power and the market went up. What is the connection? Do you see any connection between one party winning the election and Sensex rising up? Is there any connection? Did Modi put any setting? Any idea, any guess? You can say the answer, it can be wrong, that is okay. More foreign investment? Okay, that could be one reason. Okay, many people thought that there will be some positive changes in the economy. Any other reason? Okay, let me tell you the first reason. A stable government is the most positive factor for the stock market. Otherwise what happens, understand, there is one government and it has 2-3 allies. All of them together have formed a government. Now when the government says we are going to take this decision, XYZ decision, and the allies say no, no, we are opposing. If you do this, we will remove the support. Do you think then that government will be able to go ahead with all the decisions that they had thought? No. Because they have to go hand in hand with so many people with different mentality. Now with this NDA win, what happened was there was a single party which came into power. Now do you think with this stability, they will be able to take decisions whatever they wanted to take? Yes. And that's a huge positive sign for the market. We are in 2019. This is the best time that you are doing this class. Because there is a repeat election this year. So see this is history what has happened. And in stock market we always say that history repeats. So you never know if you have a good. So again I'm not saying it's BJP or it is Congress which has actually impacted the market. No it's not because BJP won. It's not because Congress lost. I'm not saying that. It's because we had a stable government. If we have a stable government in 2019 again with good majority then do you think this history will repeat? Any guesses? Yes, ideally yes, ideally. So that is why understanding all the terms right now is very important. You can start with your investment with a very nice uptick in the market. Okay, so I hope now with this you have understood that there are loads and loads of hiccups. Minor things will come in the market, no doubt about that. But if you see in the long run, Now do you think that all this investment in stock market is risky or not that risky if you talk about the long run? Not that risky. So I hope you are convinced. Okay, so that was the first myth that investments in stock market is risky. I have convinced you with that, that there is no problem in long run. Okay, so let's move on to the myth number two. You need to have a very strong knowledge about finance, then only you can succeed in stock market. Okay. If you are from a finance background, will that help? Obviously yes. I can't say that anyone and everyone without reading anything can work wonders in this subject. But there are many many people who don't have a finance background but still they have worked wonders in the stock market. You want to see a list? Have a look at this. List of successful billionaire Indian investors. Any successful stock market king you know outside India? Any person you know outside India who is very successful? Warren Buffet, everyone knows that. Warren Buffet was a person who started investing in stock market at the age of 11 or 12. And in his book he has written that I regret that I started investing in stock market at a very late age. Everyone is saying that we are 21 years old. We have not even started investing in stock markets. So, that's a big one. Let's talk about Indian. Rakesh Jhunjhunwala. How many of you have heard this name? Yes, 1, 2, 3, 4, 5. Okay. So, he's like the Indian Warren Buffet basically. He has an amazing net worth. And those who have learnt tax, till 1 or 2 years ago, there was something known as a long term capital gain tax. What is a long term capital gain tax? For those who don't know about this, I'll just quickly tell you in brief. Long term means you have to buy the shares and you have to hold the shares for minimum one year. Okay. After holding them for one year, if you sell it. and if you gain from that if you win money from that then it will be known as a long term capital gain long term q below for for the for the perfect say why long term you have held it for more than one year so you assume you bought it in 2017 Jan and you're selling it in 2019 Feb obviously it's a long term asset you to do Sal Cooper oh yeah and capital gain because as you had bought the share at 100 and you sold it at 150 so that's again So ideally 50 is your gain, yes or no? Quickly, yes 50 is your gain. Is it like your income? It's your gain, is it like your income? Yes obviously. So whenever you get income, you have to pay income tax on it. Agreed? This is like your income, you have to pay income tax. But there was a provision in income tax which said that if you have a long term capital gain, you need not pay any tax on that, zero tax. So you can imagine all these successful investors, they are earning not in thousands or lakhs, they are earning in double digit crores, triple digit crores possibly. And how much tax they are paying? Zero. Legally or illegally? Legally. So can we learn from them? Can we use the same strategy? Aapne 2-4 zero kam rahenge. But can we at least go ahead with this that we can buy a stock and try not to sell it within one year. So if you do that, obviously whatever gain you want to get that is going to be completely tax free. Let me ask you a basic question. When you invest in shares, do you get something in return? Like, a simple comparison is, if you invest money in FD, what do you get in return? Interest. Correct? If you invest in shares, do you get interest? No. What do you get? Dividend. What is the terminology? That is known as dividend. Okay. I'll just write few things here. Okay. Now, let's understand a very big difference between interest and dividend. Okay, I'll just try to... Okay. So the point which I was talking about is difference between interest and dividend. Interest is on FD. Have you heard about debentures? It's more or less like an FD. But it is a security based thing. You don't have to go in depth. But mainly these are the two instruments, financial instruments on which you get interest. I want a quick feedback for this. Can interest vary on fixed deposit? Can bank say this time you will get 4%, next year you will get 4.5%, next year you will get 5%? Can bank vary? Can bank vary the interest? Might happen by the way. Might happen. Why understand? Why understand? Bank declares the interest rates well in advance. It's not like a surprise. Please understand my question. Would it happen something like this that maybe you made an FD on let us say 1st of May. Okay. And at that time bank had promised you at the rate of 7%. Can they now say in between somewhere around October. We are very sorry to inform that now the rates have been revised to 5%. Can they say that? No, now they can't say that. They will have to pay you at the rate of 7% at least till your FD matures. Let us say it matures on 30th April. Is this okay? They can't change the interest rate in between only. But wait, can they declare 5% rate in October for all new FDs starting on or after October? Now everyone agrees? Of course, this is a very big drop. This never happens. But just as an example, I'm talking about. So once a return is given on FD at the beginning of the year or at the beginning of you starting the FD, can I say that will continue irrespective of changes in the market? The promised return is that going to continue till your FD matches for you all? It will remain the same for you. For a new investor, could that be different? Yes. Okay, one more simple question. Can banks say that this time business is not good, this year will not give interest? Next year we will give a little bit more interest. Can bank say that? Is interest payment optional for the bank or is it mandatory for the bank? It's mandatory for the bank. You can't say I will decide whether I have to give or not. But then if we talk about dividend, on which you get dividend? Shares. Now the important point, is it mandatory? Do you have to give dividend? No, it's not mandatory. Okay, let me ask you one more question. If company is doing very good, amazing, its sales continuously increasing, its profits are continuously increasing, they have doubled their profits, they have tripled their sales, still can the company say, nahi de na dividend? Can they say that? Then can shareholders say, sab khudi kha jaoge kya? Humko kya milega? Babaji ka? Thank you very much. Is there any company who has earned a lot of profit and has refused dividend? Apple also Google. Google is one company which has been earning loads and loads of profits but they have not given dividend. You want to know the reason why? What they say is that, okay we will give you dividend at the rate of 5%. 5% dividend we will give you. But then they asked a question to the investors. Do you have the capacity to reinvest this money? Understand this carefully. Assume that they gave 5% dividend. So every shareholder got 5-5 rupees. I mean dollars let us say. 5-5 dollars everyone got. Now the management or you can imagine the board of directors in one of the meetings said. How much can you out of this entire money let us say 5 dollars they got as a dividend. Okay. Where can you reinvest this money? Some said we will invest in FD. Some said we will invest in some other stock. You know what are the FD rates in USA? You will say that you don't know about the FD rates in USA. What are you asking about the FD rates in USA? FD rates in USA are around 2-3%. 2-3%. But their loans are also very less. You will get a loan in roughly 4% also. Which is around 10% in itself. Okay, so then Google asked, you have the capacity to reinvest this money only at the rate of 2%. So, how much money will grow at this rate? 2%. But if you invest this money back into Google, we have the capacity to increase the value of this at a much much higher rate. How can Google reinvest it in the business? How can Google reinvest in the business? Can they expand their operations? Can they invent new products and gain share out of that? Yes. Watch the Google Home. What is it called? Alexa and what not. Alexa, you have seen coffee with Karan. Alexa, turn on rapid fire lights. Alexa turns on the rapid fire lights. There is a big you know thing which even Google has contributed to this. Now, whatever product Alexa sells, whatever Google Home sells, can I say Google is going to get profited with that? Obviously yes. More and more ventures they go into, more and more profit they are going to earn and more and more profit they are going to earn, then what will happen tell me? Their share price should ideally increase. Are you getting this? Ek baar fur se, newer and newer businesses. Newer and newer, very important, successful businesses, their sales are going to increase. If their sales increases, ideally their profits should increase. If profits increase, share price is obviously going to increase. And if share price increases, then return to investors will? So let us understand, originally assume that the share price of Google was $100 per share. Now do you think it's going to stay at 100? Or it will rise? For sure it will rise. Let's say it goes up to $110 with this good profit. Tell me how much is the return? 10%. 10% return was given, 100 was the initial investment you got 110% return. Now what is Google management saying again? How much did you get? 43% How much did we get? 10% So you don't have the right to give dividend, Google said. That if we give dividend to you, you will not be able to invest in a better manner. We will be able to reinvest. We will be able to give you better returns. So, now I have learnt a very important concept for those who are learning this for the first time. Interest versus dividend. We get interest on what? FDs. Right now let's not talk about debentures. We get interest on FDs. We get dividend on shares. Is interest once declared, is it fixed for you at least? For you is it fixed? Yes. Once company starts, can they declare a dividend and is it mandatory that they have to keep it constant for years to come or they can decide whether to give or not? They can decide. It's fluctuating in nature. Okay, and one more very very important point we talked about right now is the concept of LTCG. What was LTCG? Long term capital gain. When do we say long term? If you are holding it for more than one year. And whatever gain you get, is it taxable or tax free? Tax free. Now let us come to one more tax treatment for interest versus dividend. You should know this before investing. I am sure you might have those who come from CA background you have learnt this in intermediate but that you had learnt only from the perspective of clearing the exam now we are talking from the perspective of investment ok so whenever you invest money in fixed deposit you will get interest is this interest taxable is interest taxable yes at what rate depends on your level of income Depends on your level of income. So you all are students right now. Your income is definitely less than You like 50,000? Up to 5 lakhs. Your income is less than 5 lakhs. So you can enjoy. Can you invest in FD? Can you get interest and still not pay even one rupee of tax? Yes, that is possible. But don't keep the aim that we have to become tax free for the entire life. That should not be your aim. Aim should be when will I go into the tax limit? And when you enter that, then the question arises, interest or dividend? What is the tax treatment for dividend? Taxable, tax free? It's tax free. There are certain limits for that. Okay. Again we are not going to dig down so much deep in the first session itself. But dividend, prime of AC is tax free. Okay. So if you are in 30% tax slab or 20% tax slab. You are a tax free person. Does not matter. Whatever dividend you get. Are you going to pay even 1 rupee tax? Legally or illegally? So, we have learnt two important things about the share market. One is dividend and the other is LTCG. Both are getting on shares investment only and both are tax free. There are certain limits, we are going to discuss that. So, if you want to note down these basic points, you can note down all these basic points at least. At least the main main terminologies as such. So what was the first terminology I talked about right now? LTCG Long Term Capital Gain Tell me what is LTCG? Yes, that is there. What is the meaning? Okay, so if a person holds shares for more than one year and earns profit and earns profit it is known as LTCG long-term capital gain okay Second concept is dividend You can tell me in simple words. See we are not going to go by definitions. There are proper definitions for all these things. We are going to understand the meaning rather than definition. You have seen three dates right? Three dates means book's definition. paper jacket and bound this that this that I said, did you know in easy meaning? he said, sir I forgot the book I said, just say like this we are writing like this in simple words right so who can tell me what is dividend? can I say in simple words it's nothing but return on investment in shares yes so write down dividend is what? return on investment in shares One more very important point to be written there. What will you write? Very important. Is it mandatory for the company to give dividend every year or company can its company's decision whether to declare dividend or not? Company's decision. Okay. So one more line. It is the company's decision. Whether to declare dividend or not. Is this okay? Okay, we haven't said one point yet, we will say that too. Just remind me about dividend is given on what? This is going to be the face value concept. Okay, so before we move on to that, what is the very important point to write now? Is it tax-free or not? Yes, so write down the third important point. Dividend and LTCG are tax-free for individuals. Dividend and LTCG are tax free for individuals. Subject to limits. Subject to limits. Subject to limits. Subject to limits. Subject to limits. Subject to limits. Subject to limits. Subject to limits. When you come in the class, you are a student. Then you should not get that feeling that, but I am in final or I am not a student. So shall I give you homeworks? Something you go home and at least do a Google search. So this is exactly your homework. What? Limit. Is there any limit? So I'll give you a simple example. Understand what is the question. What is the homework you have to understand? If I earn 100 crore rupees of dividend, wow, I will not be in the class. I'll be just enjoying all holidays, entire life. Okay. If I earn 100 crore rupees of dividend, do you think 100 crores will be tax-free? Ideally not. Let me twist the question. If I earn one crore rupee dividend, one crore rupee dividend, will that be tax-free? No. No. If I earn 1 lakh rupee dividend, will that be tax free? For 1 lakh rupee dividend, yes. And for 1 crore rupee dividend, no. So there has to be some defined limit, right? Are you getting my point? There has to be some limit which is defined. Yes. Similar question copy paste for LTCG. 100 crore LTCG, 1 crore LTCG, 1 lakh LTCG. So there has to be some limit. You just have to google and find out. Ye limit kya hai? Till what dividend is exempt and till what LTCG is exempt. This will take not more than 5 minutes. But you will get that feeling that you have done your homework. Yes, so everyone is going to give me an answer tomorrow for this. Very good. Important concept one more. Dividend is paid on what? This is the concept. So give the next heading as face value. Face value. Okay, this is a very very very important concept so I want maximum attention. Okay, those who invest in shares, you might have heard something coming up in the news wherein the management says that we are giving 100% dividend. Management says this 100% dividend. And those investors who are not really sure that what is going on, they might be thinking that something fake is going on. Do you think 100% dividend is possible? Yes. It's 100% of what is the question? 100% of what? Is it 100% of market value? 100% of market value. If it was, everyone would not leave. Like you know, there's a share. Do you know the current market price of Britannia? My biscuit is 5-10 rupees. What is the share value of Britannia company? Any idea? It's roughly around 3100 rupees per share. Imagine management says 100% dividend. on 3100 no no no no no on the face value the important is what is face value I'm going to come to that I'll tell you the face value of this face value is 2 rupees face value is 2 rupees market value is 3100 rupees so whenever company says we are declaring 100% dividend means 2 rupees dividend Okay, so what is this face value exactly? Anyone knows? The original price at which the share was bought by the promoters of the company. Okay, do you understand promoter? Promoter is a person who starts the company. Those who don't know, you may write it down also. Promoter is a person who starts the company. If you want to write, you can write quickly. Because you are going to come across these terms so frequently on business channels. Promoters. Promoter is a person who starts the company. So tell me who is the promoter of Reliance Industries? Dhirubhai Ambani. But wait now. He is the promoter means he has become a very good start. Now he is not. So could there be multiple promoters now? Yes, now there is a possibility. This happens only at the initial stage. When you start the company, that person is known as the promoter. But could there be multiple promoters also? Can 4-5 people start the company together? Why not? Yes, all these people will be known as promoters. Again I am repeating this is the base level definition. Base level meaning. Everything is going to have a higher level meaning. But if I start discussing all these hyphen 2 ideas today only, you will get scared. So, let us start. So, this was the basics. Let's go through the promoter again. A person or group of persons who start the company. Is it okay? So, you can imagine something like this. We all start a company. Will we do it? Yes, we will do it. Everyone, take out one lakh rupees. Just as an example. So, everyone contributes one lakh rupees. And we create a company known as ABC Limited. We have invested 1 lakh rupees in ABC Limited's bank account. Do you want a proof that we have invested 1 lakh rupees in this company? Or just put it like that? It will take proof, right? What will be the proof? Now you are saying, we have invested in this company, agreed. But a very basic question which arises, what will we get? Okay? If you are, you all might say, see I have come up with the initial proposal. We will all start the company together. But right now I am saying if you want to start a company, it will take money and initial contribution. So I say everyone has to give 1 lakh rupees. Now the very first question you are going to ask me is that if we have these 1 lakh rupees, if we invested in a bank, you would have got interest. Correct? If you had invested this 1 lakh rupees in the bank, you would have got interest. But then I am saying don't invest in the bank, give it to me. Or we all will start a company with that. Okay. You will ask what will we get in return? Will we get interest? If we invest in this company, will we get interest? No, we won't get it. What can we get? What can we get? We can get dividend because you all will be the shareholders of the company. But to become a shareholder, we should get shares first. Shares should be allotted first. So now what happens? Let us take an example. Company name? ABC Limited. Okay. Let us say there is one person who has invested 1 lakh rupees. So, would he ask for some receipt? Give him his receipt. What is his receipt? You said it. That receipt is nothing but a share certificate. Okay. So, here you can see there will be a share certificate which mentions name of the holder. Okay. and how much money will be paid for this or how much money will be paid for this how much is the shares for this face value should be there so face value is written very clearly that face value is 2 rupees who decided this, we all decided this very important, this is not covered in the CIS syllabus Who decides the face value? Does law decide? No. Can there be multiple face values of different different companies? Means what let us understand. Not all companies have a face value of 2 rupees. Any company's share can be of 2 rupees. There could be some companies which have a face value of 10 rupees also. There could be a company which has a face value of 1 rupee also. Do you understand? Different companies have different face value. It is possible. Every company can decide its own face value. But who decides? Who decides? Promoters. We all will have a meeting together and we all will decide. We are giving 1 lakh rupees agreed. What are we going to get in return? We are going to get in return shares. How much will be the value of one share? 2 rupees is what we have decided mutually. We have all decided this together. Is this okay? Yes. So what will be written on this? Face value 2 rupees. Will it say number of shares? Yes or no? Yes. So number of shares. How much will it be? Basic Mathematics 1 lakh rupees So divided by 2, how much you are going to get? 50,000 shares So now we will get this physical share certificate which says, Rachana is the owner face value is 2 rupees How much shares she has got? 50,000 Will we all have such kind of a share certificate? Yes Now you will say madam please Nowadays, there is no such thing as a share certificate. Everything is in the DMAT form. Correct? I will give you an example of our own academy. Expert Professional Academy. Private Limited. Private Limited means that is also a company. Think about it now. It is also a company. So, do you think there will be shares of Expert Academy? Obviously yes. Will that also have a face value? Yes, has to have a face value. Okay, now if we are talking about expert professional academy private limited, can you come and ask me ma'am show me a share certificate? Is it possible to show you a physical share certificate? Yes or no? Yes or no? Answer is yes. Yes. How? Not in DMAT format? No, it's not in the DMAT format. It's in the physical format. Okay, first time you are hearing we are in 2019 and what is your academy doing? Expert Academy has physical shares not in Demat. Now let us understand why do you think Demat is required? If the company is listed, if the company is a huge company, it's listed on the stock exchange. Bombay stock exchange, national stock exchange, all these terms are going to come slowly. If companies listed on the stock exchange then you need dematerialized securities, demat securities. Okay, now let me say one more interesting thing. Reliance industry is limited. Do you think they will have physical shares? The answer is again yes. Even today, by the way if I am not mistaken, last date is April 2019 which SEBI has given as an ultimatum. April 2019 is the ultimatum given to the companies. Do it in DMAT now. You can come across a document. I am telling you the name of the document. The name of the document is Annual Report. It is like a report card of the company. It is a mandatory disclosure to tell the shareholders as to how many shares are still in the physical form. And believe it or not, all listed companies have on an average at least 1% of the total shares in the physical form. My dad. He worked with Kirill Oscar Brothers Limited, listed company. Okay, for so many years, almost 32 years he served the company and then retired. At that time, he got some shares of the company. Okay, it was that time, so obviously he got in physical. He hates the stock market. And it's always a tendency that whatever your parents hate, you have to love it. Okay, so me and my brother, we both invest in stock markets. And the other day we were asking our dad, what happened to your shares? He said, they are still there in my cupboard. I said, don't do this. It will go waste if you don't dematerialize it. He said, I don't know how to do it. I said, I am there. Only condition is that I will then transfer it in my name. Okay, well, it'll be worth something. There was a very recent story which came up in the newspaper that there was a person whose grandfather passed away and he used to stay with his grandparents. Very recent story, I guess not even one or two months ago. And he was cleaning the cupboard. He was also very tensed up that how his grandfather's income used to run the house. how is he now going to survive itna and when he was cleaning the cupboard he came across few papers okay by the way this this went on air okay this was cnbc tv 18 you might have heard about this channel cartoon network sunana they say there is cnbc channel it's a business channel on that there are people who call and they ask their queries about stock market and there was one guy who was saying i was cleaning up the cupboard and i came across these papers Which paper is this? Share certificate Okay And he said these these shares If I am not mistaken it was MRF or some Maybe if I am not mistaken it was MRF only And some MRF I can see some 100 or 1000 shares whatever Will I get some money out of this? Will I get some money out of this? Any idea what is the share value of MRF? Somewhere around 35000 per share Somewhere around 35000 per share And the caller went mad on television. The person who was giving the answer was double mad. He was imagining why not my grandfather. Okay, so that is the scenario of financial literacy in India. He is saying that I find some papers. will get some money for this what? this is a share certificate ok now I hope you understand this is even today share certificate in physical format yes or no? yes if you get something like this in your home don't forget to dematerialize it before April 2019 earlier the deadline was Jan 19 they have extended it to April 2019 ok you can also tell your relatives and friends if you have anything in dematerialized format you have to get it converted Now the question is, who will you approach? Don't give my number. It's very simple. Approach your broker. You must have a stock broker. You must have an account with some broker. If you don't have an account, you can open with one. And they have a form. You just have to fill up a form. And after filling the form, after giving some basic documents, your shares will be dematerialized. It's as simple as this. Okay, so now quickly tell me coming back to our discussion. What is this document known as? Share certificate. Who gets a share certificate? The shareholders will get a share certificate. Original shareholders who are there in the company? Promoters who started the company. We have given 1 lakh. We have decided mutually the face value will be 2 rupees. How much shares will we get? 50,000 each. How much is the share? Is this okay till here? Now if our company performs very nicely and if we decide that dividend denge abhi. And you say we will give 1000% dividend. Means how much rupees? 1000% dividend means how much rupees? How will 2 rupees become 1000%? 1000% not 100%. 1000% means 20 rupees, not your mathematics class. 100% is 2 rupees, 1000% will be 20 rupees. Is this okay? So concept of face value is clear? Yes? Can you now visualize a share certificate also? Absolutely? And all big companies, listed companies, is there a possibility that very minute number of shares but will still be in the physical form? Where will you understand whether it is like this or not? annual report I talked about this like a report card in the annual report you'll find how many shares even today are in the physical format is this okay for sure but majority shares for listed company will be in the demat format demat what does it mean by the way the materialized materialized what love physical form material materialized we have dematerialized it we have removed the material from it that's why it is called E-share it has become electronic share can we take this journey back also from E-share to physical share yes that is known as remat that is rematerialization but no one will do this Because we are moving from physical shares to demat shares. But there is a concept known as remat also. Rematerialization of shares. Concept is clear? Yes, everyone? I will also show you some actual share certificate. tomorrow, this is my homework I will get a photocopy or a photograph of one share set and show it to you ok, so you remember your homework, I will remember mine right, so can we move on so myth number 2 which I was talking about you need to have a very strong knowledge about finance now you are getting a feel good factor even though you don't have knowledge yet, but you are getting a few concepts in your mind sure so I was talking about Rakesh Jhunjhun who is he? he is a chartered accountant So, first example is of a chartered accountant. How can I start with non-finance people? I am a chartered accountant. I will start with CS. So, Rakesh Jhunjhunwala is a chartered accountant. Ramdev Agarwal. Have you heard about this person? Motilal Oswal. Motilal Oswal is a stockbroker. He is a founder. What is the better name for the founder? He is also a chartered accountant. Now we are going down to the list of successful billionaires and we are moving from finance to non-finance now. Parag Parekh. You might not have heard his name but I hope he has a lot of heading. He is a billionaire investor. Look at his degree. He has a master's degree in commerce and economics. Master's degree but in commerce economics not a chartered accountant. Vijay Kedia, our fantastic degree, B.Com. B.Com everyone studies for at least one hour on the exam day. He studies that much. And do we still get a distinction? Yes. That's enough. He is a B.Com. And still among the list of successful billionaires in India. Puringu Veliat you should watch CNBC okay and my personal suggestion to you is don't watch it during business hours don't watch it between 9 15 to 3 30. What is 9 15 to 3 30? That's when the stock market starts at 9 15 and it ends at 3 30. When you see in between, everyone will say buy this share, sell this share and we'll watch using buy. We should buy. That is not what we want. After 3.30 starts the analysis part of shares. Some news based on the shares. And we will get to see many of these people who actually come up on television and discuss some shares. That's actually value addition. And Porinju Eliyat, who is he? He is a law graduate. Now he is not even related to direct finance. Next, Ramesh Damani. Look at the specialization. HR specialization and I have deliberately put their net worth in the list. 1.24 billion USD. Multiply it by 70, you will get Indian rupees. Okay, disclaimer, all the data I have got about their net worth, they have not told me about it. It is available on the net and I have just copy pasted it. So, his net worth has changed so I am not responsible for that. This is internet data. And the amazing person, Mr. Radhakishan Damani. Check out his net worth. 7.1 billion. How much 1.24 billion US dollar. This is 7.1 billion US dollar. And he is an undergraduate. Correct. You know who is Radhakishan Damani? Heard about his name? Demart? Let's go shopping. Now try to implement this in your day to day life. When you go to D-Mart, ask any employee, who started D-Mart? There will be some person who started D-Mart, right? He is Radhakrishan Damani. And he is such a fantastic investor, believe it or not, Rakesh Jhunjhunwala, who is a Chartered Accountant says that my guru in stock market is Mr. Radhakrishan Damani. So Radhakrishan Damani had invested so much in equity shares, but at one point of time he said that, see the thought process, this is the thought process of successful investors, he said for a lot. So many years in my life I have invested in shares of other companies. In simple words he said I was a part of others success story. See the thought process. Almost for the last 20 years I have invested in different different companies and I am a part of their success stories. Now it is time. That I make my own success story and I make people a part of my success story. And that is how he thought that let's start. company, let's start our own venture and for that he also stayed in US for some time. De Mart, he first started after studying Walmart. Walmart, have you heard about this? Yes, it's a huge chain of shopping malls in USA and he studied how it is there, what happens there, he analyzed it and modified it according to Indian markets. he thought why not start our own supermarket chain in India and that is how Demart actually started ok so now I am sure do you know the story of Demart? what was the current market price of Demart? anyone knows? no? ok I haven't taken the concept of IPO yet but just see what you understand today otherwise the concept of IPO is going to come in the future The IPO price of D-Mart was 299 rupees per share. Okay, I'm telling you in very simple words right now. IPO price concept. Coming back to our own company. What was the name of our company? ABC. Right now, how many people are invested? Only we are invested in the company right now. Now the company is getting bigger. We need more funding. Okay, so let us say 200 more people come in and join our company. Now, a company which started as ABC Private Limited, now we move up to ABC Limited or Public Limited. The name itself suggests ABC Private Limited, now ABC Public Limited. Will there be limited number of investors? Yeah, there will be much much more investors. Much more investors. Assume we have now 500 members in our company, 500 shareholders in our company. We can't still keep it as a private limited. We have to convert the company into a public limited company. But now still we need more money. We need more shareholders to come in to give in money. So what is one more option? List it on the stock market. Okay, this process I'm going to explain thoroughly tomorrow. But today I'm explaining it in a brief. Journey starts with a private limited company. Moves ahead to a public limited company. Then can grow large to a listed company. That's also a public limited company by the way. But it becomes listed on the stock exchange. So now when other people want to come into the market. They want to be a part of Demart. Coming back to our example now. Listen carefully, listen carefully. What was the face value of our ABC? 2 rupees. Now do you think the new investors which are going to come in, we are going to offer them at 2 rupees? We had started it with 2 rupees per share. But it has been let us say 5 years that we have started this company. Now company is becoming big. The company is getting success. Do you think we are going to offer them at 2 rupees only or much higher price? Much higher price. So let us convert this example into DMART now. Assume face value of DMART was 2. If I am not mistaken it was 10. But let's continue it 2. But they said those who want to come into our company now, we are going to offer them at 299 per share. If you want to take then take, if not then don't take. Your choice. There might be some investors who might have said that face value is 2 rupees. You are demanding at 299. So are they asking for extra money from you all? Yes. Why? Is this a completely new venture or it is established now? It's established. Risk for the new investors will be less or more as compared to us. Will be less. Little bit established. So you have less risk. So pay some extra amount for that. And a technical term comes up. We say these shares are issued to the shareholders at premium. Issuing of shares at premium. Normal English what I will say. You are issuing at premium means what? Is it higher than the face value? How much is it getting for 2 rupees? It is getting at 299. So we are issuing the share at premium. But then the shareholders might say, we are taking it at 299. What will be the benefit to us? Do you think it might get listed on the stock exchange even at a higher price? Yes, and believe it or not, this share got listed on the stock market at 600 rupees roughly. Roughly 600 rupees. Do you know any shareholder of Demart who had invested in this IP of 299 standing right in front of you? I had purchased at 299 and day one of listing you will know about this listing in coming days but it gets listed on the stock exchange on BAC and NSE how much it gets listed? 600 rupees and many of my friends immediately sold it on the same day double return less than one month I said what to do? What I did was I said I will sell half of my shares. So what happens if I sell half of my shares? Is my money recovered completely? So just as an example, suppose I had invested 100 shares at 299. If I sell 50, can I say my basic cost is recovered? Now whatever is invested, that's like completely gained which has been reinvested. So I don't care about that now. Even if it goes down, I don't care about it now. Do you know the current market price? It's around 1100 rupees. Okay, index 1, 1.5 here, 1100 rupees. So there are loads of success stories. You have to understand which share can perform better. It's not going to be so much in this basics. I'm just telling you an example. You must know these fascinating stories about stock market. and then only you will get more and more interest in this so what concept was there now? phase value what is called as issue price ok all this is going to come but I am just giving you 1 rupee and 600 is the listing price at which it got listed on the stock market Why did I give this example to you? We were talking about whom? Who is the name? What was the name of that person? Mr. Damani. Educational qualification? Undergraduate. Net worth 7.1 billion USD. Okay, so do you think that definitely we can reach not even 7.1 billion dollars but we can do something in this area even if we are not from finance background. Is it possible? Very much yes. So I hope you are convinced. Hashtag convinced. That you need not have compulsorily a finance background so that you can invest into stock markets. You just need to have that much inquisitiveness about the stock market. Okay, now let's see what is myth number 3. Small investors like me cannot make money from the stock market. You need lots of money to invest in stock market. You might say madam stipend ne milta hai 1000 rupiah? 2000 rupiah, bhot hogaya, 3-3500 rupiah, kya ho se hoga? Those who are working, you might get more money but then you might feel 7.1 billion dollars. I hope you have a good day. whatever okay 7100 rupees so what to do with that do you really feel with a small amount you can really gain from stock market with a very small amount can you start investing in the stock market is there any limit can you start even with 100 rupees yes you can start with 100 rupees also no no problem about it i'll tell you a fantastic story I told you he is one of the successful billionaire investors in India. Now see his story. He comes from a very poor family in Kerala. He struggled for his education due to the financial condition. He comes from a farming family actually. What I read about him that he had his parents were farmers and they had a very small piece of land in Kerala. And when Porinju was in school at that time he always used to be the school topper, class topper, school topper. His teachers told his parents that you should not stay in the small village in Kerala, you should go into the cities. give him good education he will definitely become a much much brighter kid parents said we don't have that much money to go in city so what they did was they sold off their farmland and with whatever money they got they shifted to some city in Kerala city we shift connect about he started his education education my graduation Hoga graduation on a kebada he joined Ernakulam telephone exchange and operator stock exchange telephone exchange and that was an operator of telephone exchange means you might have seen let us say something happens to your phone and you call the customer care now something like that that's where he had joined but when he started working there simultaneously was also completing his law graduation graduation studies he completed his law graduation from Ernakulam stock from Ernakulam law college and then what happened after his graduation He started, I mean during his graduation only he had started to get some idea about something, there is something known as stock market. He started reading on that. And after reading through some books, through newspapers, he thought that let's have some practical knowledge on that. And for that he had an opportunity to join Parag Parikh Securities. Parag Parikh Securities is nothing but a stock broker. You know any stockbroker by the way? I just took a name a while back Motilal Oswal, that is one stockbroker Any other stockbroker you know? Angel Broking is a stockbroker, any other? Sher Khan is a stockbroker, any other? Edelweiss is a stockbroker, any other? Zerodha is a stockbroker. These are different stockbrokers. Parag Parekh securities is also a stockbroker. So, he joined here and after Parag Parekh securities he worked with Jiojeet. Jiojeet is also again a stockbroker. Now, he started enjoying the stock market. And with this, when he started working, he started to get some practical knowledge. He started to invest in small amounts. And with his amazing fundamentally thinking power, what he did, he went a long way and after getting some experience, he started his own venture, which was Equity Intelligence Private Limited. Khud ka venture start karna is not a joke when you are a law graduate, I've got nothing to do with stock market. So you can imagine how much self study he must have done. At that time even my class was not there naa, basics of stock market. So he had to do complete self study. He did an amazing self study, got some good practical knowledge and then he started his own venture. And you know what happened after some years, he became one of the successful billionaires and now what happens is he had no home to stay at one point of time and he is now among the best stock pickers of India. So in the story I had heard, there are 2-3 points which I have not put in the slide, so I will just tell you orally. That when he started working, slowly slowly slowly he started investing. And his funda of investing is that try to search companies which are undervalued. invest in them and when they reach their actual value that is the time you should sell them so basically he believes in value investment when it reaches its actual value sell it off that's that is what his investment fund is and with this investment fund he he became so famous And he became so rich that you remember in the beginning of the story I told you that his parents had sold a farmland. After earning a lot of money, he went back to his village. He found out who is the new owner of that piece of land. He said price what you tell and area what I want. He bought that same piece of land at the price which the new owner had discussed and he has built a big farmhouse in that area only same area. Just try to google it out on internet, Orinjeweliyaht farmhouse and you can see amazing photographs. Audi car is standing, he is sitting on the car and there is a peacock on his shoulder. And so many birds which are around, it's in that same farmland which I was discussing, which had to be sold to his parents. so now you can imagine this success story not just one but there are thousands of success stories I have just talked about one and there are thousands of failure stories also you might have seen in the newspaper also whenever market falls there are such stories also I am not going to tell you only the goody goody part of stock market you have to know the realities of stock market it can make you a hero or a zero both ends are possible if you do it systematically you have to become a hero okay so like now i hope you are convinced that he had no home to stay he had started with that amount and today he's among billionaires so can you start investing in stock market with a very small amount also is it possible absolutely yes there's no bar that you should have a lot of money for that but now i'll tell you the problem with his you investment psychology okay problem is that he keeps on investing in very small and unknown companies please understand this last part very carefully okay he he always believes in investing in what small and unknown companies and then he says when it reaches its true potential when it goes big it grows big at that time it's going to be a big profit agreed yes but now you might say Number one, we don't have that much knowledge. Number two, we don't have that much time to do a research and find out all the small companies which are undervalued. Do you think if you invest in large companies, can you get good returns? Mind blowing returns? Large companies. Hi Annie, I'll give you a simple example. Everything for you, you need proof for yourself. And which is the company that I'm going to talk about? The renowned company which has given strong returns. Very renowned, one is L&T of course and the one which I am going to talk about is Britannia which I gave as an example some time ago. You have to use common sense while investing in stock markets. Common sense works best in stock markets. Just have this thought process in your mind, how many Indian households might not be eating Marie biscuit. Do you think there will be even one Indian household which does not eat biscuit? One Indian household can be there. Definitely. We have so many people who are living even below poverty line. But you look at cities, city areas. Will there be any house which does not have British biscuit in it? It is impossible. So now tell me, is there any death for their basic product? No death for their basic product. and if their product if they come up with newer and newer products if they innovate more and more then don't you think their sales are going to increase slowly and steadily yes again our original funda sale of the slowly steadily increase over the ideally ideally profit well a profit will slowly and steadily increase and slowly and steadily share price also has to increase so for that I've taken one small chart for you all these figures are rupees in crores we are going to do the last 15 minutes so I want 100% attention I have 2-3 new terminologies for you the very first terminology is turnover turnover is nothing but sales and here you have profit what is the basic difference between turnover and profit? basic difference between turnover and profit turnover is sales and profit is After deducting all the expenses, what you get is profit. In simple words, can I say turnover minus expenses is profit before tax. Then you will pay tax and after that you get profit after tax. In many business channels. They will say top line growth and bottom line growth. What did they use? Top line growth and bottom line growth. What is this top line? Top line is nothing but turnover. In simple words, top line is nothing but turnover. You want to write this down? Top line. Because this is the word that all the analysts use. Top line. Top line means what? Turnover. and bottom line bottom line is profits bottom line is profit generally profit after tax okay now let us see what has happened always remember whenever you are doing any analysis at least do an analysis for past five years Try to see their growth story. Starting with how much? 2014, I have taken the data till 2018. 2019 March, little bit left now. So I can't tell you 2019 figures. See their turnover story. Started with, 2014, started not, but see the turnover of 2014. 6300 rupees. We will round up. The market is in. 6300 crores is the turnover moves up to 7200 crores moves up to 7800 crores 8500 crores 9200 crores has the turnover increased slowly and steadily yes now let's check the profit profit is 370 622 763 844 and 948 I am going to wait for one minute. I want to see your analysis. Analysis only on turnover and profit figure. This does not require finance knowledge. This requires only common sense. Turnover and profit, is there any relation? Okay, it is a direct relation. Is there a possibility in some cases turnover might increase but profit might decrease? Think about it, can this happen? Turnover increased, sales increased, but profit decreased or losses increased. It can happen. When could it happen? When your expenses increase out of proportion. Your expenses are much much higher than your sales numbers also. I have heard about Amazon, Flipkart, Myntra, all these online companies. are increasing their turnover top line but they are in bottom line losses amazon is in loss yes discounts that they give cashbacks that they offer, everything is going into losses. They are just into the phase right now wherein they want to give, I mean they want to get used to it. You want to invite this culture among ourselves that whatever happens, online, quickly. But I feel somewhere down the line, Indian mentality is a little bit different. In Marathi we call it Pukat Te Poshtik. that whenever we get it at discount whenever we get it at a rock bottom level then only we are going to enjoy it even today i do like this that maybe uh on book my show there is this internet handling charges on book my show and if i know that this picture even if i go directly there i'm going to get it i will not book it through book my show why to give 50 rupees extra you This mentality is very much prevalent in Indians and that is why the internet shopping companies, e-commerce companies as they call, they are having a very nice top line but their bottom line is not strong because their control over expenses is not that good. Okay till here? Yes. Now going back to the story, any other knowledge, any other relation? Use your logic. I'll wait for a Hint, compare 2014 to 2018. Anyone? Anyone? Proportion of increase. That's the right answer. Proportion of increase. Turnover has gone from 6000 to 9000. I am rounding off the figures. So how much turnover has increased in 5 years? How much times it has increased? 1.5 times. 1.5 times turnover has increased from 6000 to 9000 and what about profit? 370 to 948 almost 3 times almost 3 times now is this an amazing scenario you are doubling your sorry you have just not even doubled the turnover 1.5 times of the turnover but profit level you are going 3 times And friends, those who have learnt liver ages, this is a bit of a liver age concept. But it's okay, we are not here right now for liver ages. But can I say this is a good story? Yes. Do you require finance knowledge for this? This is logic, this is common sense. So what you can do? Take a 5 years chart, check how much the turnover has increased and check how much there? profit line has increased instead of saying turnover and profit what are you going to say now check their top line growth i say bhaari lagna chahiye check their top line growth and bottom line growth and if the bottom line is growing at a higher pace or lower pace at a higher pace as compared to the top line growth is it a positive sign yes now do you need to find out all these small and undervalued stock or is this a very famous stock Very famous stock. People say we are scared to invest in stock market. You invest in Britannia by paying money for buying the biscuits. That's also an investment. If you are buying shares of that, if you are buying biscuits of that company, buy shares of that company also. Why not? People say we are scared about stock market. Then keep money in Bank of India. Okay, in FD. Why are you keeping money in Bank of India? Bank of India is safe. You feel Bank of India is safe? Then invest in shares of Bank of India. Are you getting my logic? If you have faith in some organization, why not buy shares of that organization rather than buying only biscuits of that organization? But don't blindly buy it, also check their financials and then buy it. Does only a study of past help or do you need to know about their future prospects also? You should also know a little about future prospects. Like, so I am telling you some future prospects. Before I move on to future prospects, one more interesting thing. What was the share price? Let's quickly go through the share price now. This is also an amazing part. See the share price. Turnover increased by 1.5 times. Profit increased by 3 times. Now share price. Rs. 800 moves up to moves up to 5000 rupees 4970 almost moves up to 5000 rupees so 85040 So, has this share price increased more than 5 times? Quickly turn over increase by 1.5 times. Top line, bottom line 3 times. Share price 5 times. So, had someone invested in 2014 at 843 rupees, the current market price would have been 4970. This is market price as on 31st March, 2000. This is 18. The latest price today is 11th February. I took the price of 8th February that is 3110. Good or bad? Good or bad? It's good? Really? Why? If someone had invested in 2018. Then it's bad. Oh, company share price has gone down. From what on 31st March? From 4970, roughly 5000 rupees to 3110. Biscuit khana ban kiya logon hai. Why this damage happened? Any idea? No, so understand we are going to do the last concept for the day. So let's focus. This is known as the concept of stock split. Is known as the concept of stock split. Last 5 to 7 minutes 100% focus. Stock split what happens? We have talked about the concept of face value today. What is the concept of face value? Face value of Britannia, 2 rupees. Market price of Britannia as on 31st December was roughly around 5000 rupees. Now tell me, what happens? Can small investors buy into Britannia, yes or no? Small investors, do you think they will have the capacity to buy Britannia shares? Why? To buy one share they require 5000 rupees. They can't buy such a share. So liquidity, liquidity means more and more people buying, more and more people selling. Will that be comparatively less or comparatively more? Comparatively less because people who are buying into one share for 5000, they are going to be comparatively less. So company says that if the market price itself goes down so that more and more people can buy, that'll be good. Market price goes down is good? Can company declare from tomorrow so that all poor people can invest in our company from tomorrow revised share prices 2500. Will it work? Who will be mad at them? who will be mad at them? who will get angry? shareholders who have bought at 5000 are you mad or what? we bought at 5000 what did we do? it's not our mistake so now what has happened understand company says don't worry what we have done is we have split the face value from 2 rupees to 1 rupee. Listen carefully. Face value of this share which was 2 rupees, it is written on it, 2 rupees. Now they have said, now this 2 rupees we are taking it as 1 rupee. But now let us understand the impact. Every one of us had how much shares tell me originally. Assume we started Britannia, let us assume. We had how many shares of Britannia? 50,000 rupees shares we had. Why? because we had purchased one share of 2 rupees and invested 1 lakh rupees in totality agreed but now today companies are saying that we all take a decision that now its value will not be 2 rupees but 1 rupee so your revised price is 50,000 then I said my money went half my money is half This does not happen. So understand what happens. If they are splitting the face value from 2 to 1, what is the basic objective? Should this 1 lakh remain intact? Should this 1 lakh remain intact? Yes. So what they will do? Double the number of shares. Face value goes half, no problem. Double the number of shares. So now everyone will get 50,000 additional shares. Do you have to pay anything? You will get 50000 additional shares. Of how much face value? 1 rupee. So now what happened? Say, in the revised scenario, how much shares do you all have including me? 1 lakh shares of 1 rupee. Is our value intact or is our value damaged? It's intact. Yes? What is the benefit now? market value which was 5000 per share what is this? now you can imagine something like this this 50,000 shares we all had now how much is this? 1 lakh shares now do you think it should be 1 lakh into 5000? Now the revised price please understand this is basic mathematics again basic mathematics please pay attention 5000 corresponds to 2 rupees face value basic ratio 5000 rupees corresponds to 2 rupees face value so for one face value what is the corresponding face market price that should be 2500. Are you getting my point? Yes. So the moment stock splits quickly, I want correct answers. Moment stock splits from 2 to 1, your face value has halved. The number of shares have doubled and the market price has also halved. Market price is also halved because see this is your normal ratio. 2 rupee face value, 5000 is the market price. For 1 rupee face value, it has to be 2500. But people don't understand this. What will people say? 5000 rupees share went down to 3110. Very bad. Now tell me, why did this happen? Because there was a stock split. Britannia had declared a stock split in August 2018. If I am not mistaken, it was 20th August. 20th August 2018, after that what happened? Fast 2 rupees face value share went down to 1 rupee face value share. That time the price 5000 went down to 2500. Good or bad? Or neutral? Neutral, there is no good or bad thing. But those who don't understand this, what will they say? Gone. Company is into a very bad position. They have halved their share price. And mad people will start selling shares of Britannia. Should we be among the smarter lot? we should be among the smarter lot ideally now will more people ideally should they buy in more yes and we should be among them so those who bought in 2500 now what is the current market price now it is 3110 Are you getting my point? How much percentage return if someone bought at 2500? What is the percentage return? Basic mathematics. 10% of 2500 is 250. Double of 250 is 500. 2500 plus 500 is 3000. So this is 20% more. Getting my point or not? When had we bought the share assuming post split we buy more shares? How much would be the price after split? Original price before split, how much was that? 5000 was the share, price before the split. After the split, 2500. Assume we buy at 2500. What is today's market price? 3110. How much is the return? This is a 20% return, more than 20% return. In how many months? In how many months? This was in August. September, October, November, December, Jan. In fact, it's still going on. Within 6 months, 20% return. FD doesn't give this much return. Are you getting my point? Yes. You understood the concept of stock split. Have you written stock split in your notes? What happens to the face value? Does it increase or decrease? Decreases. Is it necessary that it has to be half? Not necessary. It can be some other also. For example, face value of 10 rupees can be, let us say, you can bring down the face value of 2 rupees. If some company has a face value of 10, can they bring it down directly to 2? Possible or not? Possible. In our example what is happening? 2 rupees face value is coming down to 1 rupee face value. So in simple words what is a stock split? The face value of the share is split. The face value of the share is split. Number of shares will increase proportionately or number of shares will decrease proportionately? Increase proportionately. Number of shares will increase proportionately. Okay? Want to write down an example? Example write down. Original FV. You can write it down like this. Original FV. Revised FV. How much was original? 2 rupees. Revised FV is? 1. Now, number of shares. Originally, how much did we have in our example? 50,000. So revised number of shares will be 1 lakh. Therefore value, value is intact, there is no change in the value, value is intact. Is this okay? Yes? So I hope you have understood this. Is this a bad thing that it moved down from 4900 to 3100? It's a good one. Why? There was a stock split because of which this happened. So you should see these basics. And in the last slide, we are just going to check what are some operational facts about Britannia. Again, I found it on the internet only. So Britannia is mainly a biscuit company where 70% of the Indian households consume Britannia products. 70% of the household Indian households consume Britannia products. It's present in 79 countries. Not only in India, it's present in 79 countries and addition of 13 new markets that are aiming in Category of business accounts are mainly listened to biscuits, but I'm sure you might have heard about Britannia cakes, breads, toast. And they are also now coming into Croissant. Croissant is a French bakery product. It's like a toast type. I mean, it's like a curry biscuit but it has a good design. It looks like a shank. That's a croissant. They are also entering into Croissant. They have 9 plants right now. 9 factories in India. So also check their growth story. Just don't check the past. Check what are their plans in the future. In future, they are going ahead with 13 new markets. They are already having 9 plants. They are trying for more and more plants. They were originally into biscuits, cakes, breads, rusk or toast. They are also going to enter croissant. So two things we have learnt about basic fundamentals. Check the past, no doubt about that. Check the trend, no doubt about that. But also check what are their future plans. A very big disclaimer I want to give before we stop. I don't recommend this stock. right away. No, this is not possible. People can say why are you talking about Britannia? Do you own shares of Britannia? So this is just an analysis of Britannia. On paper looks good but I am not recommending this stock as such. It's your choice. If you want to buy, buy. If you don't, don't buy. So with this, I hope now you are also convinced that definitely you have other If we talk about renowned companies, can they also give good returns? Yes. So no need of searching all the small companies which can give potential good returns in the future. So today we talked about four things. What are these four things? Four myths about the stock market. Number one, we said very risky. Short term, I want quick answers now. Short term, could it be risky? Yes, long term, not really. Okay, second thing we said you must have a strong finance background required. Logic works more. analytical skills work more. Number three, we said, you must have a lot of money to invest in the stock market required though time is among the billionaires in India now. And fourth one we talked about. that renowned companies never give strong returns. It's not so. We talked about common sense again. So always try to see products around you, which products you are using right now and see who makes this? I'm wearing Will's Lifestyle shirt. Who manufactures Will's Lifestyle? It's manufactured by ITC. brand devil's lifestyle is a brand which company manufactures it ITC ITC is it listed on the stock exchange yes so I am so useless that I go in and buy only those brands of which I have shares. So I contribute to the top line story. Okay. Yes. So try to develop this thought process in your day-to-day life also. What are you buying? Who owns this company? And you'll also start going one, one step ahead in this fantastic area of stock markets. Enjoy today's session. Yes. We'll see you tomorrow.