Finance Glossary

Enterprise Value divided by EBITDA (operating profit before interest, tax, depreciation, and amortization). It's a way to value a company that ignores differences in debt and accounting choices, so it's often used to compare companies across industries.

The total value the stock market currently puts on a company: share price multiplied by the total number of shares outstanding. It's not the company's cash or assets, just what the market is willing to pay for the whole thing right now.

Price-to-Book ratio. It's the stock's price divided by its book value, which is what would be left for shareholders if the company sold everything and paid off its debts today. Below 1 can mean the market thinks the company is worth less than its assets on paper.

Price-to-Earnings ratio. It shows how many rupees you're paying for every ₹1 the company earns per share. A high P/E usually means investors expect faster growth ahead. A low one can mean the stock is cheap, or that growth is expected to slow.

The stock's price divided by its sales (revenue) per share. It's a way to value companies that aren't yet profitable, since it doesn't rely on earnings at all.

The percentage of every rupee of sales that ends up as actual profit after all expenses, interest, and taxes are paid. The bottom-line number.

Operating Profit Margin. The percentage of sales revenue left over as profit after paying for the day-to-day costs of running the business, before interest and tax. Higher means the core business is more profitable per rupee of sales.

How much a company's quarterly net profit has grown (or shrunk) compared to the same quarter a year earlier. A quick pulse-check on earnings momentum.

How much a company's quarterly sales (revenue) has grown or shrunk compared to the same quarter a year earlier.

Return on Assets. It shows how much profit a company squeezes out of every ₹100 of assets it owns (factories, cash, inventory, and so on), regardless of how those assets were funded.

Return on Capital Employed. It's similar to ROE, but measures returns on all the capital a business uses, including debt, not just shareholders' money. Useful for comparing companies with different amounts of borrowing.

Return on Equity. It shows how much profit a company generates for every ₹100 of shareholders' money already invested in it. Higher generally means management is using shareholders' capital more efficiently.

The highest level a stock or index has traded at over the last 52 weeks (roughly one year).

The lowest level a stock or index has traded at over the last 52 weeks (roughly one year).

What would theoretically be left over per share if the company sold every asset and paid off every debt today. It's an accounting figure, not a market price, so the actual stock price is often higher or lower.

Current Market Price. The price the stock is trading at right now.

Earnings Per Share. It's the company's total profit divided by the number of shares that exist, the per-share slice of profit each shareholder effectively owns. "TTM" means Trailing Twelve Months, the most recent full year of data, updated every quarter.

The nominal, printed value of one share as set by the company when it was issued (often ₹1, ₹2, or ₹10). It's an accounting reference point, not related to the stock's actual market price.

How much sales revenue a company generates for every rupee of assets it owns. Higher usually means the business is squeezing more sales out of its factories, stores, or equipment.

A quick health check on short-term finances: current assets (cash, inventory, money owed to the company) divided by current liabilities (bills due soon). Above 1 generally means the company can cover what it owes in the next year.

How much a company has borrowed compared to how much shareholders have put in. A ratio of 1 means equal parts debt and equity. Higher means the company relies more on borrowed money, which can mean more risk but also more growth potential.

The percentage of a company's profit that it pays back out to shareholders as dividends, rather than keeping to reinvest in the business.

The annual dividend a company pays, shown as a percentage of its current share price. It's the cash return you'd get each year just for holding the stock, before any price change.

How many times over a company's operating profit could pay its interest bill. A ratio of 5 means it earns 5x what it owes in interest each year, comfortable headroom. Below 1-2 can be a warning sign.

The accounting cost of a company's buildings, machines, and equipment gradually wearing out or losing value over time. It's spread across many years rather than charged all at once when bought.

Earnings Before Interest, Tax, Depreciation and Amortization. It's a rough measure of how much cash a company's core operations generate, before accounting for debt costs, taxes, and the wear-and-tear on its assets. "Margin" shows this as a percentage of sales.

One-off gains or losses that don't reflect a company's regular, ongoing business — like profit from selling a factory, a legal settlement, or a write-off. Worth stripping out mentally when judging how the core business is actually performing.

What's left of revenue after paying the direct costs of running the business (raw materials, salaries, rent), but before interest and tax. It shows how profitable the core business is, on its own.

Money a company earned from activities outside its main business, like interest on bank deposits or a one-off gain from selling an asset. Worth checking separately, since a company leaning heavily on "other income" for its profit may have a weaker core business than the headline number suggests.

Profit After Tax. The company's actual bottom-line profit, after every expense, interest payment, and tax has already been deducted. Often called net profit.

The company's profit right before taxes are subtracted: operating profit, plus any other income, minus interest and depreciation. Whatever tax is owed comes out of this number to leave PAT (net profit).

The total money a company earned from selling its goods or services in a period, before any costs are subtracted.

The percentage of pre-tax profit that a company actually pays in taxes for the period. It can vary from the official corporate tax rate due to exemptions, deferred taxes, or one-off items.

Everything a company spent to run its business in a period — raw materials, salaries, rent, and other operating costs — added together, before interest, depreciation, and tax are separately accounted for.

A company's revenue from its core business plus any other income (like interest earned or one-off gains), added together. The full top-line figure before any costs are subtracted.

The total amount of money a company has borrowed — from banks, bonds, or other lenders — that it still owes. Shown on the balance sheet as a liability.

Profits a company has kept and reinvested over the years instead of paying out as dividends. Accumulated retained earnings, sitting on the balance sheet.

The total money originally raised by a company by issuing shares, valued at their face value (not the current market price).

The total value belonging to shareholders on paper: share capital plus reserves. Roughly what would be left for shareholders if the company sold everything and paid off all its debts.

Cash flowing in or out from a company's dealings with its lenders and shareholders — raising or repaying loans, issuing shares, or paying dividends.

Cash spent on or earned from buying/selling long-term assets — new factories, equipment, or investments in other companies. Usually negative for a growing company that's actively investing in its own expansion.

The actual cash a company generated (or used) from its core day-to-day business — collecting from customers, paying suppliers and staff — as opposed to paper profit, which can include non-cash items.

The overall change in a company's cash balance over a period — the sum of cash from operating, investing, and financing activities combined.

The actual cash a company paid out in taxes during the period, which can differ from the tax expense shown in the P&L due to timing differences.

Adjustments for money tied up (or freed up) in the day-to-day running of the business — inventory sitting on shelves, money owed by customers, or bills owed to suppliers. Rising working capital needs eat into cash even if profit looks fine.

Domestic Institutional Investors. India-based funds (mutual funds, insurance companies, banks) investing in Indian markets, as opposed to foreign (FII) money.

Foreign Institutional Investors. Large overseas funds (pension funds, mutual funds, and so on) that invest in Indian markets. An "outflow" means they're net sellers in a period, and an "inflow" means they're net buyers. Both can move the whole market, not just one stock.

Big organizations, foreign funds (FII) and India-based funds (DII) combined, that own shares in the company, as opposed to individual retail investors.

The founders, founding families, or parent group that started or controls the company. Promoter holding is the percentage of total shares they still own.

The portion of a company's shares owned by everyday investors and institutions. Anyone who isn't a promoter.

A breakdown of who owns a company's shares: promoters, foreign investors (FII), domestic investors (DII), and the general public. Usually shown as percentages, updated every quarter.

The reference starting date an index uses to measure all its future growth from, paired with its Base Value.

The starting index level assigned on the index's Base Date, used as the reference point for measuring all future growth. It's an arbitrary round number (often 100 or 1,000), not a price.

The Bombay Stock Exchange. One of India's two main stock exchanges (the other being the NSE), and Asia's oldest.

The individual companies that make up an index. An index's level moves based on the combined, weighted performance of all its constituents.

An index tracking the 50 largest, most-traded companies listed on the National Stock Exchange (NSE). Often used as a proxy for how the Indian stock market is doing overall.

An index of the 50 companies ranked just below the Nifty 50 by size. Often seen as the next generation of large companies that could join the Nifty 50 in future.

The National Stock Exchange. India's largest stock exchange by trading volume.

Shorthand for a stock or index's Open, High, Low, and Previous Close prices for the day — the four numbers that summarize today's trading range at a glance.

The process and date on which an IPO decides exactly who gets how many shares, based on demand in each investor category. Applicants who don't get shares receive a refund.

The investment banks hired by a company to manage its IPO — pricing the shares, marketing the issue to investors, and building the order book. Often shortened to BRLM.

A slice of IPO shares some companies set aside exclusively for their own employees, often at a small discount to the issue price.

Part of an IPO where the company creates and sells brand-new shares, with the money raised going directly into the company's own accounts. Unlike an Offer for Sale, where money goes to existing shareholders instead.

Grey Market Premium. The price at which IPO shares unofficially trade before they're officially listed, above or below the issue price. A rough, unregulated signal of listing-day demand, not a guarantee of where the stock will actually open.

Initial Public Offering. The first time a company sells shares to the public, turning it from privately owned into a listed, publicly-traded company.

The total value of shares being offered in an IPO — the fresh issue plus any offer for sale combined, at the upper price band.

The day a company's shares officially start trading on a stock exchange (like the BSE or NSE) after its IPO closes.

The minimum number of shares you must apply for in an IPO — you can't bid for fewer, only in multiples of this number.

The smallest amount of money a retail investor needs to apply for one lot of an IPO, at the upper end of the price band.

Non-Institutional Investors. In an IPO, this is the category for wealthier individual investors and smaller companies bidding for more shares than the retail limit allows, but who aren't large institutions like QIBs.

Part of an IPO where existing shareholders (like promoters or early investors) sell their own shares to the public. The company itself doesn't receive this money, unlike a fresh issue.

The price range (a lower and upper limit) that a company sets for its IPO shares. Investors bid anywhere within this range, and the final IPO price is decided based on demand.

Qualified Institutional Buyers. Big, regulator-approved investors (mutual funds, banks, insurance companies) who get a reserved chunk of shares in an IPO, separate from the retail and NII portions.

The company (like KFin Technologies or Link Intime) officially responsible for processing IPO applications, allotting shares, and handling refunds. Separate from the banks managing the IPO itself.

An individual applying for IPO shares worth up to roughly ₹2 lakh — the category most everyday investors fall into, with a portion of every IPO's shares reserved just for them.

How much investor demand an IPO received, shown as a multiple of the shares on offer. "2x subscribed" means bids came in for twice as many shares as were available. Below 1x ("undersubscribed") means demand fell short.

A company's stated plan for exactly how it will spend the money it raises from an IPO's fresh issue — repaying debt, funding expansion, working capital, and so on.

The extra return a fund generated above what its benchmark index would predict, given the risk it took. Positive alpha suggests the fund manager added genuine value beyond just tracking the market.

Assets Under Management. The total market value of all the money investors have pooled into a fund. A rough gauge of the fund's size and popularity, though a bigger fund isn't automatically a better one.

A market index (like the Nifty 50 or a sector-specific index) that a fund's performance is measured against, to judge whether its manager is actually adding value or just riding the market.

How sensitive a fund is to overall market moves. A beta of 1 means it roughly moves in line with the market; below 1 means smaller swings than the market; above 1 means bigger swings in both directions.

Compound Annual Growth Rate. The smoothed-out, year-on-year growth rate that would take an investment from its starting value to its ending value, assuming steady compounding — used to make returns over different time periods comparable.

Equity Linked Savings Scheme. A type of mutual fund that invests mainly in stocks and qualifies for tax deduction under Section 80C, in exchange for a mandatory 3-year lock-in on your money.

A small fee a mutual fund charges if you withdraw your money before a set holding period — designed to discourage very short-term in-and-out investing.

The annual fee a mutual fund charges investors, as a percentage of your investment, to cover management and running costs. It's deducted automatically from returns — you never see a separate bill.

The person (or team) responsible for deciding what a mutual fund actually buys and sells, within the fund's stated strategy — the "driver" of an actively managed fund.

A minimum number of years you must stay invested before you're allowed to withdraw at all — not just a fee like exit load, but an outright restriction. Common for tax-saving funds.

How a fund splits its investments across large, mid, and small-cap companies. Large-caps tend to be steadier; small-caps can grow faster but swing harder in both directions.

The single worst peak-to-trough fall a fund has experienced over a given period — the deepest "how much would I have lost if I'd bought at the top and sold at the bottom" scenario.

The smallest one-time amount you can invest in a fund if you're not using a SIP — putting in the whole sum at once instead of spreading it out monthly.

The smallest monthly amount you're allowed to invest in a fund through a Systematic Investment Plan.

Net Asset Value. The price of one unit of a mutual fund — what you'd pay to buy, or receive to sell, one unit today. Unlike a stock price, it's calculated once a day after markets close, not updated in real time.

A group of statistics — Standard Deviation, Beta, Sharpe Ratio, Alpha, Sortino Ratio, and Max Drawdown — used together to judge how bumpy a fund's ride has been, not just how much it returned.

How a fund's (or index's) money is spread across different industries — banking, IT, pharma, and so on. Heavy concentration in one sector means the fund's performance leans more on that sector's fortunes.

How much extra return a fund earned for every unit of risk (volatility) it took on, compared to a safe, risk-free investment. Higher means better risk-adjusted performance — not just higher returns, but smarter ones.

The fund's return calculated from the very day it launched up to today — the longest-running performance figure available for the fund.

Systematic Investment Plan. Investing a fixed amount into a mutual fund automatically every month, rather than all at once — buys more units when prices are low and fewer when they're high, averaging out your purchase cost over time.

Similar to the Sharpe Ratio, but only counts downside volatility (the bad kind) rather than penalizing a fund for volatile-but-positive swings. Higher means better returns per unit of "harmful" risk.

A measure of how much a fund's returns swing up and down over time. Higher means a bumpier ride — more volatility — even if the average return ends up the same as a steadier fund.

The individual stocks or bonds a fund has invested the most money in, usually shown as its top 5 or 10 holdings by weight.

How much of a bank's own capital it holds as a cushion against its risk-weighted loans, as required by regulators. Higher means the bank has more buffer to absorb losses before running into trouble.

The percentage of a bank's deposits that it has lent out as loans. Too high can mean the bank is over-extended. Too low can mean it isn't putting deposits to productive use.

Gross Non-Performing Assets. The percentage of a bank's total loans where borrowers have stopped repaying on time. Higher GNPA means more of the bank's lending has gone bad.

For a bank: the difference between what it earns on loans and what it pays on deposits, as a percentage of its assets. Basically, how profitable its core lending business is.

Net Non-Performing Assets. Like GNPA, but after subtracting the money the bank has already set aside (provisioned) to cover those bad loans. A better view of the bank's real remaining risk.

Financial figures that combine a parent company's results with all of its subsidiaries, as if they were one single business.

Financial figures for just the parent company on its own, excluding any subsidiaries. Useful for seeing how the core listed entity is doing by itself.

Year-on-Year. Comparing a number, like profit or sales, to the same period exactly one year earlier rather than the immediately preceding quarter — a fairer comparison for businesses with seasonal swings.