Let\u2019s break down how to evaluate companies across three major Indian sectors: Banking<\/strong>, FMCG<\/strong>, and Information Technology (IT)<\/strong>.<\/p>\n \u2705 Net Interest Margin (NIM)<\/strong> \u2705 Gross & Net NPA<\/strong> \u2705 Provision Coverage Ratio (PCR)<\/strong> \u2705 CASA Ratio<\/strong> \u2705 Capital Adequacy Ratio (CAR)<\/strong> \u2705 Loan Growth & Credit Quality<\/strong> \ud83e\udde0 Red Flags<\/strong><\/p>\n \ud83d\udea9 Sharp NPA spikes \ud83d\udccc Related:<\/strong> Learn how to analyze management quality<\/strong><\/a> in banking by reviewing NPA trends, capital allocation, and shareholder communication in this breakdown.<\/p>\n \u2705 Volume Growth vs Value Growth<\/strong> \u2705 Gross & Operating Margins<\/strong> \u2705 Brand Strength & Market Share<\/strong> \u2705 Distribution Reach<\/strong> \u2705 New Product Launches & Innovation<\/strong> \u2705 Working Capital Efficiency<\/strong> \ud83e\udde0 Red Flags<\/strong><\/p>\n \ud83d\udea9 Overdependence on 1\u20132 SKUs or geographies \u2705 Revenue Mix (Geography + Vertical)<\/strong> \u2705 Deal Wins & Order Book<\/strong> \u2705 EBIT Margins<\/strong> \u2705 Attrition Rate<\/strong> \u2705 Utilization Rate<\/strong> \u2705 Digital Transformation Focus<\/strong> \ud83e\udde0 Red Flags<\/strong><\/p>\n \ud83d\udea9 High attrition + wage pressure combo Investing isn\u2019t just about picking good companies\u2014it\u2019s about using the right lens for each sector.<\/strong><\/p>\n From understanding NIMs and NPAs in banking<\/strong>, to margins and distribution strength in FMCG<\/strong>, and deal wins and attrition in IT<\/strong>\u2014each sector demands tailored metrics and mindset.<\/p>\n Whether you’re evaluating HDFC Bank<\/strong>, Britannia<\/strong>, or Infosys<\/strong>, use a sector-specific framework<\/strong> to make confident, data-backed investment decisions.<\/p>\n \ud83d\udccc Want to go deeper? Check out:<\/p>\n How to Analyze Management Quality Using Public Data<\/a><\/p>\n Understanding Moats in Indian Companies<\/a><\/p>\n Related Blogs:<\/strong><\/p>\n Stock Market Investment: Top 4 Equity Investment Tips for \u201cBeginners\u201d<\/a><\/p>\n What Is Fundamental Analysis? A Beginner\u2019s Guide with Indian Context<\/span><\/a><\/p>\n How to Read a Company\u2019s Balance Sheet: Step-by-Step with Indian Examples<\/span><\/a><\/p>\n Profit & Loss Statement: What Matters for Retail Investors in India<\/span><\/a><\/p>\n Cash Flow Statement: Why It\u2019s More Important Than Net Profit<\/span><\/a><\/p>\n How to Analyze Management Quality Using Publicly Available Data<\/a><\/p>\n
\n1. Banking Sector: Where Trust & Risk Management Rule<\/h3>\n
\ud83d\udd0d What to Analyze<\/span><\/h2>\n
\nThe difference between interest earned and interest paid. Higher NIM = better profitability.
\n\u2192 Private banks like HDFC Bank often score better here than PSU banks.<\/em><\/p>\n
\nNon-Performing Assets reflect bad loans. Lower is better.
\n\u2192 Aim for Net NPA < 1.5% in quality banks.<\/em><\/p>\n
\nHow much has been set aside for bad loans. A PCR > 70%<\/strong> indicates conservative risk management.<\/p>\n
\nPercentage of cheap deposits (Current + Savings accounts). High CASA = cheaper cost of funds = stronger moat in banking.<\/p>\n
\nIndicates financial resilience. Regulated by RBI. Must be above 11.5%<\/strong> under Basel III norms.<\/p>\n
\nLook for steady loan book expansion without compromising on asset quality<\/strong>.<\/p>\n
\n\ud83d\udea9 High reliance on corporate loans
\n\ud83d\udea9 Low CASA in a rising interest rate cycle<\/p>\n
\n2. FMCG Sector: Brands, Volume, and Pricing Power<\/h3>\n
\ud83d\udd0d What to Analyze<\/span><\/h2>\n
\nFMCG revenues grow either through more units sold (volume<\/strong>) or price hikes (value<\/strong>).
\n\u2192 Volume growth is more sustainable and indicates real demand.<\/em><\/p>\n
\nConsistent margins reflect pricing power and cost efficiency, even in times of input inflation.<\/p>\n
\nLeaders like HUL<\/strong>, Nestl\u00e9<\/strong>, and Britannia<\/strong> have strong brand recall, pricing power, and repeat customer loyalty\u2014a clear sign of economic moats<\/strong>.
\n\ud83d\udccc Explore this further in Understanding Moats: What Makes a Company Defensible in India<\/a><\/p>\n
\nWider distribution = more shelf presence = better sales conversion.
\n\u2192 Check rural vs urban sales contribution.<\/em><\/p>\n
\nShows agility in adapting to trends\u2014health foods, sustainable packaging, D2C channels, etc.<\/p>\n
\nFMCG businesses typically operate with negative or near-zero working capital cycles due to fast inventory turnover.<\/p>\n
\n\ud83d\udea9 No pricing power during inflation
\n\ud83d\udea9 Flat or declining volume growth<\/p>\n
\n3. IT Sector: Exports, Margins, and Talent<\/h3>\n
\ud83d\udd0d What to Analyze<\/span><\/h2>\n
\nBalanced exposure across BFSI, healthcare, manufacturing, etc., ensures resilience.
\n\u2192 Too much reliance on US or BFSI = higher client concentration risk.<\/em><\/p>\n
\nLook for large deal wins and renewal announcements.
\n\u2192 TCS, Infosys, and HCLTech report this regularly in earnings.<\/em><\/p>\n
\nA healthy IT company typically maintains EBIT margins > 20%<\/strong>, even in tough quarters.<\/p>\n
\nLower attrition = lower cost pressure and better productivity.
\n\u2192 Retention practices and culture are key long-term indicators of management quality.<\/em>
\n\ud83d\udccc Revisit the role of people-centric capital allocation<\/strong> in IT in our post on How to Analyze Management Quality<\/a>.<\/p>\n
\nMeasures how well manpower is deployed. Ideal levels: 80\u201385%<\/strong>.<\/p>\n
\nLook for capabilities in cloud, AI, analytics, cybersecurity<\/strong>\u2014this is where future growth lies.<\/p>\n
\n\ud83d\udea9 Margins dipping below 17%
\n\ud83d\udea9 Large client exits or vertical-specific slowdowns<\/p>\n
\nQuick Comparison Table<\/h3>\n
![\"\"](\"https:\/\/www.gwcindia.in\/blog\/wp-content\/uploads\/sites\/2\/2025\/07\/Screenshot-2025-07-10-130511.png\")
<\/p>\n
\nConclusion<\/h3>\n
\n