In the course of finding the most time-efficient way of analyzing companies shortlisted for investment, I’ve come across various tools available to Indian investors. This post compiles a list of some of the tools that I’ve tried either briefly or extensively along with some of their key strengths and weaknesses. Note that this list is far from comprehensive and also that digested analysis from any source is typically only a starting point and not a substitute for diving into past annual reports to gain context of the fundamentals.
Overall note of caution on using any tool that aggregates data is to assume there will be some data errors in what you get. So, always doublecheck numbers for stocks you’re getting serious about direct from the source.
Fundamental Analysis Tools for Indian investors
Not mentioned in any specific order, this post covers key features of morningstar, screener, ratestar, trendlyne, simplywallst, marketsmith, stockedge with brief mentions to capitaline and gurufocus for fundamental stock analysis of Indian companies.
Just so we are clear: I have no commercial arrangement with the makers of any of the tools mentioned. The opinions here are my own. If you are aware of other tools that you have found useful, drop me a note at thecalminvestor [at] gmail [dot] com
morningstar is the American granddaddy of information sites when it comes to making financial information available to retail investors. While the depth of coverage in the US is something else, their India website offers statistical information and fair value estimate on almost all listed stocks as a decent starting point for an investor starting to evaluate a company.
Free and user-friendly
Free sign up, slick website and user-interface that logically groups and visualises information for easy consumption.
Fair price estimate but DCF and proprietary
Historical comparison of actual versus “fair price” based on their own model, a three-stage discounted cash flow (DCF) valuation model the details of which are not available to retail investors. Some high-level information on the model can be found here. Without knowing the robustness of the assumptions going into a model, it takes quite a leap of faith to invest based on this value. But at least it’s something.
Capex spend by year
The financial data page also has Capital Expenditure that’s not easily available from other sources simply because it’s not typically reported as a line item in most standardised information feeds. However, there are gaps in that data with the number missing for one or two years of the ten but you can fill in the gaps by downloading the respective annual reports.
The site offers only select historical financial metrics to download which means you can’t create your own formulae to double-check their outputs, especially since bad data is always a problem.
Wide and Narrow Moats
This morningstar paper explaining what makes a moat says in their methodology, high ROIC over Cost of Capital over 20 years is a wide moat and 10 years is a narrow moat.
As of this writing, the morningstar website says there are 8 BSE stocks with wide moats and in strong financial health that are fairly valued: Emami Ltd, Glaxosmithkline Pharmaceuticals, HDFC Bank, IndusInd Bank, Infosys, Interglobe Aviation, Kotak Mahindra Bank and RBL Bank (there are no undervalued stocks with wide moats). However, there are 134 undervalued stocks in strong financial health and have narrow moats.
Pre-Built customisable Stock Screens
Known primarily as a you-guessed-it “stock screener”, screener has pre-built stock screeners like ‘Bull Cartel’, ‘Magic Formula’ that show a list of stocks meeting a set of criteria. It shows the query used to identify those stocks and allows you to customise and save modified queries as your own user-generated screen
Export 10 years of financial statements
screener allows you to export 10 years of historical financial data (Balance sheet, Profit & Loss and Cash Flow statement) and P&L for last 10 quarters into excel. Pre-screener days, you had to go to moneycontrol, navigate to each financial statement tab, copy and paste into excel. In addition, the screener stock page offers a short “Pros” and “Cons” for each stock based on fundamentals, but I’ve never paid much attention.
While that’s already quite handy, it’s most powerful use case is that it allows individual users to customise their download template to do their own analysis of the numbers and even build charts on the data. I’ve found this feature to be priceless when trying to get a quick overview of the fundamentals of the company.
My customised tab on the screener template looks like the image below. Everything on this tab is auto-populated when clicking ‘Export to Excel’, including the charts and colour codes. And because you build your own formulae for customisation, especially like for critical metrics like ROE, ROCE, it offers a higher degree of confidence and consistency across companies.
Look around the web and a lot Indian investment-related sites/blogs offer a screener template either free or paid. My post on using screener to reduce the effort required to assess potential investment ideas: Evaluating stocks with TCI Rapid XRay
The caution for screener (like for all the tools here) is it it’s easy to become too dependent on its outputs and not realise where some bad data might have infected your numbers.
Thanks to reader Bijay Nayak for pointing me here
Just the facts
Similar to the minimalism of screener.in, ratestar offers a clean UI with focus on the financials. The financial statements provide the ability to drill down further to see for instance, what make up current liabilities. They do have a star rating system based on a score out of 99 which “is based on a combination of both technical and fundamental rating arrived at after backtesting previous years’ data.” It’s a pity it doesn’t have an ‘export to excel’ feature like screener.in
Search by investor
An interesting differentiated feature on ratestar is the ability to search by investor to see their portfolios and latest activity.
A useful tool for fans of coat-tailing strategies, the ratestar investor holdings page shows a chart with allocation by sector and the holdings in that sector with a summary on the right of recent activity and a table tracking holdings over time.
While it may seem tempting to follow popular investors into their stocks, I would not recommend using data on what famous Indian investors are up to because of several reasons including asymmetry of information to the retail investor versus large shareholders, lag between their actions and when they become available in the public domain, their ability to take risk and not least, they don’t necessarily get them all right.
The remaining tools in this post have a combination of free and paid features. Also, they rely on providing digested information in the form of proprietary model scores which might work for some investors but not for others.
Paid, few free features
Trendlyne is limited on fundamental data/information and offers subscription plans for access to screeners and other features like building customised screeners and backtesting them.
They call them DVM scores with colour coded indicators on how good or bad a score is.
You don’t get much by way of explanation of how the scores are arrived at except that it’s their proprietary model. You will need some faith to invest based on DVM scores.
Screener on steroids
Unlike screener.in, trendlyne also offers technical and momentum screeners. You can use pre-built premium screens or build your own. The most (theoretically) useful feature is the ability to backtest screeners which is one essential (but not sufficient) input in implementing a screen-based strategy. Theoretically, because I haven’t used the paid features.
Annual subscriptions start from ₹2,950 all the way to ₹25,890 the difference between the base and premium levels seemingly being in the number of backtests and rebalances allowed.
Largely free, One Paid Feature
marketsmojo looks to analyze stocks every which way and offer a three traffic-light view summarizing the suitability of the stock.
Extensive “digested” information
The page explodes with so much information, it can be a challenge to know where to look.
Mojo Scorecard – Three traffic lights
They do boil down all the information to three hard-to-miss traffic lights meant to signify Quality, Valuation and Financial Trend.
Unlike morningstar, marketsmojo valuation is based on a comparison of current price multiples against historical trends for the stock and with sector peers. Further information says “We have looked at many variables including asset-based valuations to make the measure more stable and meaningful.” Price multiples as a means of identifying cheap stocks is risky, and could backfire spectacularly. So that big shining green light doesn’t make me very comfortable.
The paid MojoProfessional offering allows selecting and tracking your own portfolio based on their screeners. The annual subscription is about ₹10,800.
Free plan allows 10 companies / month
simplywall.st is an Australia-based site offering international fundamental analysis site covering stocks in 27 international markets including India. Their approach is to source data from S&P Capital IQ and visualise the heck out of the data. Everything chart and graph on this site is a treat to the eyes.
The cornerstone of their offering is called ‘The snowflake’, “a visual summary of the 30 checks from our company analysis and gives you an instant understanding of company’s investment profile, helping you quickly decide if it is worth researching any further”
Each company is assessed on metrics corresponding to Value, Income, Balance Sheet Health, Past Performance and Future expectations. The shaded area and colour correspond to how high the company scores on each of those composite parameters.
Fair price estimate with two-stage DCF
The site offers valuation based on a discounted FCFE (Free Cash Flow to Equity) model. It also shows relative valuations based on Price- Earnings, PEG ratio and Price-Book. Since no valution methodology is perfect, it helps to get a few estimates to form a range. Again, the quality of visualisations on this site is far better than anything you’re likely to have seen elsewhere. (and no, this is not even a sponsored post)
Like with any tool, I’m most interested how a stock is classified over or under-valued. Unlike the other sites, this one provides complete detail on how it arrives at the value for each specific company.
Clicking on the bar charts shows a detailed calculation of future projected cash flows and discount rates applied to arrive at the fair value. It doesn’t solve the problem of using DCF but it at least gives you the basis on which the future has been predicted, which is analyst consensus estimates.
Predicting the future
The big difference from other sites is the use of consensus estimates to provide what the future holds (according to analysts of course).
However, don’t let the elegance of the visualisations impair your critical reasoning skills that should be asking how often analysts get their guesstimates right. Money is typically made on stocks that outperform pessimistic estimates and lost on stocks that even mildly underperform overly optimistic estimates.
Stock screener by another name
The site also allows you to identify stocks that match specific snowflake patterns, either pre-built or user-defined.
The paid subscription is $115 USD / year (~ ₹7,500)
Thanks to a reader Krishnan for pointing me to this site.
Basic scoring and information free, Paid features offer further analysis
marketsmith’s stock anaysis combines fundamental and technical / momentum factors to arrive at a “Master Score”, a letter rating where it recommends focusing your research on stocks rated B or better.
Most fundamental information is summarised by the parameter ‘EPS Strength’ – a score of 0 to 99 based on long-term and recent financial performance. ‘Group Rank’ actually refers to the price performance of the industry group over the last 6 months (i.e. whether a sector is in favour at that time). ‘Price Strength’ is a relative strength metric based on price momentum while ‘Buyer Demand’ tracks institutional buying / selling.
What can get a bit confusing is the switch between grade letters and number scores for parameters. Like the ‘Details’ tab for Bajaj Auto shows a ‘Master Score’ of 46 while the main page shows ‘C’ as Master Score.
A unique feature of marketsmith is the ‘Checklist’ feature that checks for conditions met against 3 standard frameworks: CANSLIM, Benjamin Graham and James O’Shaughnessy
Built-in Stock Screens
marketsmith has a ton of pre-built stock screens under themes like India Model Portfolio, Guru Screens and Marketsmith Stock Screens.
The problem is each screen throws up a set of stocks, but the criteria that picked them are not intuitive to the user. The Benjamin Graham “Guru” Screen identifies 3 companies, Master Trust Limited, Vivimed Labs, and Rci Inds and Techs. I wouldn’t know what to do with that.
A paid membership that costs ₹13,900 annually, but a week-long full-feature trial can be purchased for ₹99.
Free with paid features.
Surprising amount of information packed into a small visual footprint. Mobile-only interface will not work for everyone.
Limited inferences, shows Numbers as-is
Fundamental information split across two tabs. ‘Fundamental’ and ‘Financials’. There is no interpretation of the financial numbers through colour-codes or scoring frameworks which might fail the “so-what” test when looking at a stock.
The trending visualization over the last few periods provides a handy snapshot.
The visualisation of historical results can be surprisingly powerful when used to look at key return ratios.
Same principle applied to shareholdings can provide a quick reason to reject some shares (where promoter shareholding is dropping). (The ads at the bottom overlapping the main screen can get annoying at times)
Overall handy tool to get the highlights on a stock when on the move. Fundamental analysts might find this to be more of a starting point before diving deeper on larger screen real estate.
Paid membership plans run at ₹3,390 for the regular membership. The community-based membership with access to learning webinars called “StockEdge Club” goes for ₹15,000.
They also offer a personalized mentorship program for ₹30,000. I would wait to get rave reviews from unbiased members you trust before even considering this.
Other than platforms like bloomberg, the database used by most professional fulltime investors. When it comes to access to detailed raw financial information, this is the platform of choice. The focus is on providing extensive financial data along with some qualitative commentary on sectors and companies. The utility is in being able to view and download financial statements at varying levels of granularity (Condensed – Detailed – X-Detailed)
The downside, the UI continues to feel quaint (remember visual basic applications?) compared to other platforms. The excel downloads have still have the .xls (and not .xlsx) extension (another sign that there isn’t a product team hard at work to make it more contemporary)
There is a price to pay for the comprehensiveness, ₹1,50,000 / year
No experience at all on this one but positioned as a comprehensive international investment site. At $400 / year, the insights better be blinding.
I will add to this post as new and better investor tools make their appearance.
How to pick the right tool for fundamental analysis of stocks?
The “right” tool is investor and person-specific. Some investors need to see the underlying numbers to infer their own conclusions while others prefer to see overall derived scores. It’s about how you best consume information, through charts, tables or infographics and colour codes. My suggestion is to identify the top 2 that seem most promising and take a trial membership. If they don’t offer one, write to them to ask for one, maybe even for a nominal fee. More information is not necessarily better, so focus on whether the tool lets you assess what’s really important and what’s distracting (e.g. the ‘top investors investing in x stock’ feature on ratestar is unique. However, it is potentially damaging information for me since knowing that some well-known investor has just bought or sold the stock might interfere with my decision-making). All said, using any tool consistently is an improvement over both, investing based on tips or worse, not investing at all.
If you’ve come across other useful sources of fundamental information, do comment or write to me at thecalminvestor [at] gmail [dot] com.
Title Image Source: wvbadbuildings.org