Shark Tank India has caught the eyeballs of all age groups, even children too. The makers of the series wanted to make entrepreneurship and start-ups a dinner table conversation in a regular Indian household. Although the show is designed as a platform for budding entrepreneurs to raise funds, new investors in the stock market can learn a lot from investing strategies of sharks which you would learn from a stock market training institute. As an investor you can see how an angel investor thing about the business before deciding to invest. In this blog, we will see how to invest like a shark as you would learn in a share market training in Noida and get 10x return. Let us dive in Financial Lessons from Shark Tank India!
A shark never invests when the investee company comes with stupendous valuation!
In Shark Tank Season 1, an entrepreneur by the name of Gaurav Goyal, who runs a Delhi-based ice cream business came. His joint is known for its pure vegetarian and oil-free ice creams which comes in different flavours and is called “Gopal’s 56”. He came to Shark tank and asked for 300 Cr for 25% equity which meant he valued his business for Rs 1200 Cr.
(Calculation = 300*100/25=1200)
While he was making just sales for 4.5 Cr annually which meant he was valuing his business for a price to sales of 266 Cr. To this Ashneer Grover says,
“It will take you 70 years to achieve sales of Rs 300 crore from one shop. And you are asking Rs 300 crore from us for a 25 per cent stake. This makes us feel like you are being silly. There is no business in this. Even if you come to us 10 more times, I will say no”
Another example was also in Shark Tank Season 1 by Rubal Chib and Dr. Srishti Batra who are the founders of qZense Labs. Their business focused quality assessment of fruits through device which will assists you in finding out if the fruit is fresh or rotten fruit without cutting. The sales of the company were just Rs 15 Lakhs annually, but they demanded a 400 Cr valuation which was stupidity. Their ask was Rs 1 Cr for 0.25% equity which comes to valuation of 400 Crores. The sharks lashed them for such stupendous valuation.
But at the same time some of us who have not done any online share market courses find value in many businesses which are trading at a stupendous valuation as you may find in the image. How can such valuation be justified it might take 3-4 years for this valuation to justify? When you are investing in a company after doing a fundamental analysis from share market training in Noida with such high valuation you are exposing you & your portfolio to extraordinal high risk. The chance of making money becomes very less as the valuations are very high and it cannot go higher than this.
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A shark always understands the business fully before investing (Looks at pros and cons of Financial Lessons from Shark Tank India)
Know your business and know it well! A person investing their hard-earned money will ask the most pertinent questions if they have completed stock market courses online with certificate.
How much is your business worth today, how much can it be worth tomorrow, what are your qualification, are you planning to scale it and how do you have invite other investors, are you planning to expand with newer products, if you are a B2B firm are you planning to scale it to B2C or D2C or vice versa, if B2C who are you customers , do you have any competitors and many such questions arise in the mind of investor. Same should also arise in your mind if you are investing in any stock after learning through best stock market courses.
Learn Financial Lessons from Shark Tank India: Assessing a company’s product or service has potential in the market you want to scale in. Understanding the potential and usage in the market helps in planning your investments better.
You will see Shark Tank India judge Namita Thapar “Ye meri expertise nahi hai. I am out!”. It even sparked a meme fest on social media. The phrase “expertise nahi hai” might sound naive to some but it is nothing short of a very important mental model in the business of investing propagated by none other than Warren Buffett and Charlie Munger which is called circle of competence theory.
“You don’t have to be an expert in every company, or even many. You only must be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital,” Buffett had written in his 1996 letter to Berkshire Hathaway shareholders.
Therefore, wherever you invest after learning from stock market courses for beginners free, make sure you understand the business model and what are the pros and cons of investing in that business. For instance – You decide to invest in fundamentally strong steel company because Government is giving lot of push to infrastructure in India. You must also understand that con of investing in steel company is its cyclicality element because of the fluctuation in the raw material. You can see that OPM went from 11% to -1 % and then went 26% all together. This will help you avoid making costly mistake and you can take calculated risk after utilising knowledge from stock market courses online with certificate.
Another example would be CDSL or CAMS in bull market. These companies generally do well but after that the sales keep dipping. Such risks which are taught in Stock Market Institute In Noida, should also be understood. It also comes if you ask lot of questions before investing in the business in your online share market courses.
Shark always invests in scalable business
During their interactions, sharks grilled budding entrepreneurs to understand how scalable their business models were. “I think what you are doing is a lifestyle business and not an investable and scalable business. I want to be out of this (pitch),” Grover told Delhi entrepreneur Riya Khattar who runs a clothing business, Heart Up My Sleeves.
In the same way the stock market works on future earning visibility of the company. For example, say you invested in company which makes plastics and plastics are getting banned. In such a case there is no future visibility of revenues for the company as the lessons from stock market courses online with certificate.
Another example- After 2010, in 2019 the housing sales in India, touched its bottom. The builders were not able to sell the existing buildings which they had built. This restricts them in constructing another building as the money is locked in initial construction of the business. Therefore, the future visibility of profits and revenue becomes very important for the business. This should be the main ideology for analysing ant business after learning from Online Stock Market Institute In Noida.
Always looks for credibility of the management
Many contestants across episodes faced heavy criticism from the sharks simply because they had no clue where they stood and where they aimed to reach. The question they were unable to answer was, “Where do you see yourself in the next 5/10/15 years?”
Answering that question is only possible when management knows and understand the product/service as well as the business well. Not only should the management know the strengths and weaknesses of the business but should also know the market landscape and the opportunities that it offers. Management analysis taught in stock market courses with certificate is also important to be aware of the competition and the factors that can prove detrimental to the business.
Like Episode 1 of Season 2, Two Women founders by name Yeshoda Karuturi and Rhea Karuturi came up with a brand “Hoovu fresh”. The clarity of the thoughts and the knowledge about the business and the market made the sharks very impressed with them and they invested in the business. These analysis concepts are taught in any good Stock Market Training Institute in Delhi.
In similar way clean and experienced management is very important in the stock market. If the management is fraudulent like what happen in the case of DHFL or yes bank, then we can lose a lot of money if unaware of management analysis learnt from Best Stock Market Institute In Noida. Although some frauds we would not be able to make up.
Good management will always strategize and find ways to come out of challenges. For example, when Jio entered in 2016, most of the telecom companies went bankrupt. Whereas airtel was the only one who faced the storm and came out of it. This shows the strength of the management.
Looks for problem solving business (Moats)
In season 1 Rohit Warrier, the founder of Sippline Drinking Shields who had pitched masks for drinking glasses on the show.
Grover had reacted to him asking, “Bhai kya kar raha hai yaar tu? Mazak hai kya? Aap kya bohot zyada peete ho kya? Matlab ye idea apke dimaag mein aya bhi kaise ki glass ko mask pehnauga? (What have you been doing? Is this a joke? Do you drink a lot? How do you get the idea to make glasses wear masks?)” The Shark had further added that he had very “strong views” on the idea, and that he had never seen a more “wahiyat” product than this, nor did he want to see one.
All the judges had shunned the idea and said that there was perhaps no demand for such a product in the market as he was not solving any problem.
Similarly, a business should have some superior advantage it can be some software, change in supply chain, giving at the least cost or solving some major problem. Superior moats after analysis from share market training in Noida, helps to differentiate the wheat from the chaff. For e.g. – GMM Pfaudler leading supplier of process equipment to the pharmaceutical and chemical industries.
So, one of their clients from specialty chemicals industry had been facing the problem of filtration. As they had to do manually remove and this would take a lot of time. GMM Pfaudler created a filter that helped them solve all their mentioned issues. You can even read the article below for complete case study.
All these steps if followed properly will help us pick our multibagger, but always remember diversification which you have learnt from best stock market courses is the key.