✅ Investment Checklists — Action Guides
Book: Indian Equity Investing · Print-friendly · Hindi + English
Checklist A — New Stock Research (Before You Buy)
Use: Chapters 06–27, 28–41 · Time: 2–4 hours per company
Step 1: Business (5 min filter)
- Business model samajh aa raha hai? (Circle of Competence)
- Industry outlook positive / stable / declining?
- Competitive moat visible? (brand, cost, network, switching cost)
- Promoter / management credible? (Ch 25–26)
Step 2: Financial Health (Annual Report)
- Revenue trend — 3–5 years growing?
- Net profit trend — quality of earnings?
- ROE > 15% consistently? (DuPont check — leverage driven?)
- ROCE > 15%?
- Debt/Equity manageable? Interest coverage > 3×?
- FCF positive and growing?
- Receivables / inventory not ballooning vs sales?
Step 3: Valuation
- P/E vs own 5-yr average and sector peers
- P/B justified by ROE?
- PEG < 1.5 for growth stocks?
- DCF / Graham Number — margin of safety ≥ 20–30%?
- Dividend sustainable? (Payout ratio, FCF cover)
Step 4: Governance & Ownership
- Promoter holding stable / not falling sharply?
- Promoter pledge < 10%? (red flag if high)
- FII/DII trend supportive?
- No major fraud / regulatory red flags
Step 5: Decision
- Thesis written in 3 sentences — why buy?
- Exit trigger defined — thesis break / valuation / better opportunity
- Position size ≤ 5–10% of portfolio
- Fits asset allocation plan
Verdict: ☐ Buy ☐ Watchlist ☐ Reject
Checklist B — Annual Report Review (30-Minute Scan)
Use: Chapters 09–10, 14–15
| Section | Check |
|---|---|
| Chairman's Letter | Honest or promotional? Matches numbers? |
| MD&A | Risks acknowledged? Strategy clear? |
| Auditor Report | Qualified / emphasis of matter? |
| Related Party | Unusual transactions? |
| P&L | Revenue, EBITDA, PAT trends |
| Balance Sheet | Debt, equity, working capital |
| Cash Flow | OCF vs PAT gap? FCF? |
| Notes | Contingent liabilities, accounting changes |
- Numbers match narrative?
- One red flag investigation completed if found
Checklist C — Sell Decision
Use: Chapters 57, 88
Sell IF any true:
- Investment thesis broken (business, not price)
- Governance issue (fraud, accounting, promoter)
- Valuation extreme vs intrinsic value
- Better opportunity with same capital
- Single stock > 10–15% — rebalance trim
Do NOT sell only because:
- ~~Price fell 10–20%~~ (thesis intact)
- ~~News headline panic~~
- ~~Market correction~~
Checklist D — Monthly Portfolio Review
Use: Chapters 76–80, 85–92
- Net worth updated
- Allocation vs target (equity/debt/gold/cash)
- Rebalance needed? (> 5% drift)
- Any thesis broken stocks?
- SIP / investment on track?
- Lifestyle inflation under control?
Checklist E — Financial Freedom Roadmap
Use: Chapter 98
| Step | Done? |
|---|---|
| 1. Emergency fund (6–12 months expense) | ☐ |
| 2. Term + health insurance | ☐ |
| 3. High-interest debt cleared | ☐ |
| 4. Investing 30–40% of income | ☐ |
| 5. Asset allocation set (60/25/10/5 or custom) | ☐ |
| 6. Passive income building | ☐ |
| 7. Nomination + will + estate plan | ☐ |
Target Corpus = Annual Expenses ÷ 0.04
Freedom = Passive Income > ExpensesChecklist F — Value Trap Filter
Use: Chapters 32, 40–41
Reject if 3+ true:
- Low P/E but revenue declining 3+ years
- High dividend but FCF cannot pay it
- Industry structurally disrupted
- High debt + falling margins
- Management capital allocation poor
- Stock cheap because market sees permanent decline
Checklist G — Case Study Framework (Indian Stocks)
Use: Chapters 93–97 (BEL, HAL, ICICI, PFC, REC)
- Business model mapped
- Order book / loan book / key metric checked
- Sector tailwind vs headwind
- Government / regulatory dependency assessed
- Valuation vs peers
- Bull case + bear case written
- Investment decision: Buy / Hold / Avoid
Educational only. Not investment advice.
→ Master guide (all steps): 99-complete-stock-verification-guide.md · → Formulas: CHEATSHEET.md · → Book Index: README.md