Introduction

Gandhar Oil Refinery India Ltd. manufactures and wholesales industrial oils, greases, transformer oils and automotive lubricants

Observation

As we can see stock trade LH, LL for it listing. Now stock trad in darvas box. also, breakout its last swing low. RSI is getting stronger on all time frame

10-day series (Day 9)

What are concepts of margin of safety? 🤔

Here is the advance answer with example 👇

Concepts Of Margin Of Safety

Margin of Safety (MoS) is a financial concept that represents the difference between the intrinsic value of an asset (like a stock) and its market price. The idea is to only invest in a stock if it is priced significantly below its intrinsic value, providing a "safety cushion" against errors in estimation or unexpected market downturns.

Example:

Imagine you're analyzing a stock and estimate its intrinsic value (true worth) to be ₹1000 per share. However, the stock is currently trading in the market for ₹700 per share.

• Intrinsic Value = ₹1000
• Market Price = ₹700

Margin of Safety is calculated as:

$\text{Margin of Safety} = \left(\frac{\text{Intrinsic Value} - \text{Market Price}}{\text{Intrinsic Value}}\right) \times 100$Margin of Safety=(Intrinsic ValueIntrinsic Value−Market Price​)×100

So,

$\text{Margin of Safety} = \left(\frac{₹1000 - ₹700}{₹1000}\right) \times 100 = 30\%$Margin of Safety=(₹1000₹1000−₹700​)×100=30%

Interpretation:

In this case, there's a 30% margin of safety. This means you're buying the stock at a 30% discount to its intrinsic value. If your estimation of intrinsic value is accurate, this cushion reduces your risk and increases your potential for profit. Even if your estimation is a bit off, the margin of safety helps protect you from losses.

Example Insight: If you’re a value investor, you might seek out investments where the margin of safety is high, as this indicates a lower risk and higher potential return.

Let's touch fundamentals

Srock pe is 17, ROCE 22, ROC, 15, Zero promoter holding pledged is .023

Technical Analysis & indicators 🔍

Weekly Chart

Darvas

News of the day

1. JSW Steel has raised 22.50 billion Indian rupees through the allotment of non-convertible debentures on a private placement basis, according to a Friday filing to the stock exchanges.The company has allotted secured, listed, rated, redeemable, non-convertible debentures with a face value of 100,000 rupees.The debentures have been allotted in two tranches of 17.50 billion rupees and 5 billion rupees, at a coupon rate of 8.35% and 8.43%, respectively.

2. Mahindra Group, the parent of Mahindra & Mahindra, has signed a non-binding memorandum of understanding with Sentrycs to explore opportunities to develop and provide anti-drone solutions in India, according to a Friday filing to the stock exchanges.The anti-drone solutions will be used for civilian and military applications in the technology space and will focus on the Transfer of Technology (TOT) and manufacturing of radio frequency-based counter-drone solutions.

3. India's Bharat Petroleum Corp plans to increase its integrated refining and petrochemical capacities within the next five to seven years to meet growing energy demand, Chairman G. Krishnakumar told shareholders.India's annual consumption of refined fuels and petrochemicals is expected to rise steadily by 4-5% and 7-8% in the 'foreseeable future', he said."This presents a strategic opportunity to expand refining capacity alongside the development of integrated petrochemical complexes," Krishnakumar said.

Educational content

Fri Aug 30, 2024