- What one share legally is, and what it entitles you to
- Why market cap — not share price — tells you what a company costs
- Why a ₹40 share can be expensive and a ₹4,000 share can be cheap
Your friend runs a tea stall. It takes ₹10 lakh to set up — the cart, the utensils, the deposit for the spot. You put in ₹2 lakh, he puts in ₹8 lakh.
You now own 20% of that stall. Not 20% of the cart, not 20% of the tea — 20% of the business: 20% of whatever profit it makes, forever, and 20% of the say in how it's run.
If the stall makes ₹5 lakh profit this year, ₹1 lakh of that is yours — whether he hands it to you in cash (a dividend) or keeps it in the business to buy a second cart (retained earnings, which makes your slice worth more).
A listed company is that stall, scaled up, with the slices cut very small and sold on an exchange. Each slice is a share.
That is the whole idea. Nothing about fundamental analysis makes sense until this feels obvious: you are not buying a three-letter ticker that goes up and down. You are buying a fractional claim on a real business's future profits.
Every question in this course is really one question: is this business worth what the market is charging for a slice of it?
The share price is a per-slice price, not a price tag
This is the single most common beginner mistake, and it takes thirty seconds to fix. The share price tells you nothing about whether a company is expensive — because the company chose how many slices to cut.
Both shops are worth exactly ₹1 crore. The only difference is how finely each owner sliced his ownership.
- Shop A — total value
- ₹1,00,00,000
- Shop A — shares issued
- 1,00,000
- Shop A — price per share
- ₹100
- Shop B — total value
- ₹1,00,00,000
- Shop B — shares issued
- 1,000
- Shop B — price per share
- ₹10,000
- Share price
- what one slice trades at right now
- Total shares
- how many slices exist — found in the annual report as shares outstanding
₹45,000 Cr market cap, meaning buying every share would cost ₹45,000 crore.A ₹12 share is not cheap. It is small per slice. A company at ₹12 with 500 crore shares outstanding is a ₹6,000 crore company — bigger than plenty of ₹2,000-a-share names.
Low-priced shares feel affordable because you can buy a lot of them, and that feeling has funded an enormous amount of poor decision-making. The quantity of shares you hold is not a measure of anything.
The fix is a habit: whenever you see a share price, immediately ask "what's the market cap?" — and then ask whether the whole business is worth that.
What your slice actually entitles you to
- A claim on profitsWhat it means in practice: Your share of profit, either paid out as dividend or reinvested to grow the business
- A voteWhat it means in practice: One vote per share on major decisions. With 10 shares out of 500 crore, treat this as theoretical.
- A claim on assetsWhat it means in practice: If the company is wound up, you get a slice of whatever is left — after lenders, employees and the taxman are fully paid
- Nothing guaranteedWhat it means in practice: No promised return, no promised dividend, no capital protection. Equity is last in line, always.
That last point deserves a sentence more. Lenders get a fixed return and get paid first. As an owner you get whatever is left over — which can be enormous, or nothing. The entire discipline of fundamental analysis exists to figure out which of those two you are signing up for.
Where your return actually comes from
Over a long holding period, the money you make from a share comes from exactly three places. There is no fourth.
- 1The business earns more than it used to. Profit doubles over five years. Your slice of that profit doubles. This is the honest, durable source of returns and it is what this whole course is about.
- 2The business pays you cash. Dividends and buybacks — profit handed back to owners rather than reinvested.
- 3The market decides the business deserves a higher multiple. Same profits, but buyers are now willing to pay 30× instead of 18×. This is mood, and mood reverses.
Source 1 compounds and is knowable from the numbers. Source 3 is a mood swing you cannot forecast. Fundamental analysis is the practice of relying mostly on the first and never assuming the third.
- Equity share
- The ordinary ownership slice. When people say "stock" or "share", this is it.
- Shares outstanding
- Total slices in existence. Rises when the company issues new shares, falls when it buys them back.
- Market cap
- Share price × shares outstanding — the price of the whole company.
- Free float
- The portion of shares actually available to trade, i.e. not locked up with promoters.
- Promoter
- The founding family or group that controls the company. An Indian-market term you'll meet constantly.
- Dividend
- Profit paid out in cash to shareholders, usually a few rupees per share.
See it live · Every stock page on this site opens with the business first — what it does, its size, and its scorecard — before a single chart.
Browse scored stocks →In one screen
- 1A share is a fractional claim on a real business's future profits.
- 2Share price alone means nothing; market cap (price × shares) is what the company costs.
- 3Equity holders are paid last — which is why the analysis has to be done properly.
- 4Long-run returns come mostly from the business earning more, not from the market's mood.
Check yourself
Nothing is scored or stored — the explanation after each answer is the point.
Company A trades at ₹80, Company B at ₹3,200. Which is cheaper?
A company has 20 crore shares outstanding and trades at ₹250. What does the whole business cost?