WHAT IS MARGIN OF SAFETY?

Margin of Safety is the term popularized by Mr. Benjamin Graham (known as "the father of value investing") and his followers, most notably Mr. Warren Buffett. In simple words, margin of safety refers to the difference between value and prices, when securities are bought at a price significantly below their intrinsic value. Higher the difference between value and price (i.e., value higher than price), higher the margin of safety.

While Margin of safety allows an investment to be made with minimal downside risk, it doesn't guarantee a successful investment. However, it does provide room for error/cushion against an analyst's judgment on valuation of securities. Determining a company's "true" worth (its intrinsic value) is anyway highly subjective.

There is no universal standard to determine how wide the "margin" in margin of safety should be. Each investor must come up with his or her own number.

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THESIS ON CENTRAL DEPOSITORY SERVICES (INDIA) LIMITED (CDSL)

Central Depository Services (India) Limited (CDSL) is very good stock to hold for long-term investors and I am presenting a thesis on it which is as follows: · Its fundamentals are very strong and impressive which can be understood from the following points: Ø It is a debt free company. Ø It has delivered a good profit growth of 24.10% CAGR over last 5 years. Ø It has been maintaining a healthy dividend payout ratio of 42.69%. Ø It has a healthy Cash from Operations. Ø It has a healthy ROE and ROCE of more than 20%. Ø It has a very healthy Operating and PAT Margins of 75.51% and 58.55% respectively as per the financials of F.Y. 2020-21. · The penetration to equity markets in India is still very low as roughly about 3% of India’s population invests in equity markets as compared to 55% in US, which suggests that there’s lots of headroom for India’s stock marketplace p...

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Most investors focus on the profit generating ability of a business to make investment decision. However, over the last few years, the societal discussions about companies and businesses have also started focusing on sustainable development, and corporate social responsibility. This has given traction to investment theme that is focused on Environment, Social and Corporate governance (ESG). Initially this framework was used by handful of “Impact” investors. But this framework has gradually gained traction as these frameworks also provide commercial value. Under this framework investors evaluate companies based on these criteria: (i) How does the company’s activities affect the environment? Companies with low carbon emission and low contributors to pollution rank better than others. (ii) What are the activities that the company perform in terms of social development? This includes focus on human rights, gender equality and many such social factors. Companies that contri...

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ABOUT THE COMPANY The company was incorporated in 1954. It manufactures high-quality suspension solutions for a wide range of commercial vehicles. Its product range includes Leaf Springs, Parabolic Springs, Lift Axles & Air Suspensions. It is a well- known brand in automotive Industry catering to all OEM's, Replacement Market and Export Market. For Springs – they have the highest annual capacity of over 3,00,000 MT. It offers a complete line of suspension solutions for Indian commercial vehicles ranging from tippers, tractors, trailers, ICVs, and Buses. It caters to OEM, after market, and overseas markets. MANUFACTURING CAPACITY The company has 10 plants all over India, manufacturing high quality suspension systems. The plants comprise state-of-the-art machinery and advanced technologies. All the plants are ISO certified, adhere to international safety standards, and are strategically located in close proximity to OEMs ...

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