How to analyse a stock before investing: a nine-step checklist with a worked example

To analyse a stock before investing, check nine things in order: the business, the latest quarterly results, 5 to 10 years of profit and loss, the balance sheet, cash flow, return ratios, shareholding, valuation, and the latest filings. Each step below shows where to find the number and how to read it.

Checked 27 October 2026. The worked example uses Reliance Industries (NSE: RELIANCE). Price-based figures were read during trading on 27 October 2026. Financial results are as reported to NSE and BSE up to the June 2026 quarter, and shareholding up to the September 2026 quarter.

#The nine-step checklist at a glance

#Step 1: What does the company actually do?

Start with the business, not the share price. Write one sentence on how the company makes money before you look at any ratio.

Reliance is classified under Petroleum Products, industry Refineries & Marketing, in the Energy macro sector. It has 4,03,303 employees and has been listed since 29 November 1995. Its exchange filings from 14 to 24 October 2026 cover a proposed IPO of Jio Platforms, so the group spans more than refining.

Check: sector, industry, segments, and the latest investor presentation in Documents.

#Step 2: What did the latest quarterly results show?

Compare the latest quarter with the same quarter last year, not the previous quarter. Seasonal businesses look very different quarter to quarter.

Sales grew 27% but net profit fell 24.6%. The June 2025 quarter carried ₹15,119 Cr of other income and a 17% tax rate, against about ₹4,200 to 4,900 Cr and 23 to 25% in nearby quarters. That one-off flatters the base, so the profit drop overstates the slowdown.

Check: sales, operating margin (OPM), other income and tax rate in Quarterly results.

#Step 3: Has the company grown over 5 to 10 years?

One good year proves little. Look for steady growth in sales and profit across a full cycle.

Reliance's sales rose from ₹4,66,307 Cr in FY2021 to ₹10,55,780 Cr in FY2026. Net profit rose from ₹53,739 Cr to ₹95,754 Cr over the same years. Tapetide's growth table shows revenue growth of 10.53% over 1 year and 18% over 5 years.

Operating margin stayed in a 15 to 18% band from FY2018 to FY2026. A stable margin while sales more than double suggests the growth is not being bought with price cuts.

Check: sales, net profit and OPM % in Profit & loss, and the Growth table.

#Step 4: How much debt does the balance sheet carry?

Debt magnifies both good and bad years. Compare borrowings with equity (equity capital plus reserves).

Reliance's borrowings were ₹4,02,962 Cr in March 2026, against equity of ₹9,04,030 Cr (₹13,532 Cr capital plus ₹8,90,498 Cr reserves). Debt to equity on the stock page is 0.45. Interest cost rose from ₹19,571 Cr in FY2023 to ₹27,061 Cr in FY2026.

Check: borrowings, reserves and capital work in progress (CWIP) in Balance sheet. Large CWIP means assets that are not yet earning.

#Step 5: Does profit turn into cash?

Profit can be inflated by accounting choices. Operating cash flow is harder to fake.

Reliance generated ₹1,92,113 Cr of operating cash in FY2026. Its CFO/EBITDA ratio was 113%, so cash exceeded operating profit. Free cash flow was ₹70,023 Cr in FY2026, after being negative in five of the ten years from FY2017.

Check: cash from operations, free cash flow and CFO/EBITDA in Cash flow. A CFO/EBITDA ratio below about 70% for several years deserves an explanation.

#Step 6: What return does the company earn on capital?

Return on equity (ROE) and return on capital employed (ROCE) show how much profit each rupee of capital earns. Higher and stable is better.

Reliance's ROE was 8.8% and ROCE 9.18% on 27 October 2026. Its ROCE has stayed between 8% and 12% every year since FY2017. Tapetide's Key Insights list "low return on equity of 8.77% over last 3 years" as a weakness.

Check: ROE and ROCE in Key fundamentals and the 10-year Ratios table. Compare with peers in Peers.

#Step 7: How do I check the shareholding pattern?

Listed companies file their shareholding pattern with NSE and BSE every quarter. Tapetide shows the last 12 quarters by category on each stock page.

Promoters held steady near 50%. Foreign institutions cut their stake by 5.47 points over 11 quarters, and domestic institutions bought almost exactly that amount. The shareholder count rose 40.4%, so many more retail investors now own the stock.

Check: the four main lines in Shareholding. Also check promoter pledge: when promoters have pledged shares, the Shareholding section shows a pledge line with its as-of date. For market-wide institutional flows, see FII/DII data, the monthly FII and DII flows reports and what mutual funds are buying.

#Step 8: Is the price reasonable for what you get?

Valuation compares the price with earnings, book value or cash flow. Judge it against the company's growth and returns, not in isolation.

Reliance traded at ₹1,192.50 on 27 October 2026, near its 52-week low of ₹1,152.20 and 26% below its 52-week high of ₹1,611.80. Its P/E was 21.6 on TTM EPS of ₹55.22, and price to book was 1.79. The dividend yield was 0.5%, with a payout of 9 to 11% of profit every year since FY2018.

A P/E of 21.6 with an ROE of 8.8% is not obviously cheap. The Tapetide Score labels Reliance "Expensive and Under Pressure" with a valuation pillar of 42.89 out of 100.

Check: P/E, P/B and dividend yield in Key fundamentals. Compare with sector P/E on Sectors.

#Step 9: What do the latest filings and analysts say?

Numbers lag events. The last few exchange filings tell you what changed after the last result.

Reliance's recent filings include the June 2026 quarter results on 17 July 2026, a Jio Platforms red herring prospectus on 14 October 2026 and an IPO update on 24 October 2026. Of 24 analysts tracked, 23 rate it Buy and 1 Sell. Earnings call transcripts and investor presentations are linked on the same page.

Check: Filings & documents and Analyst ratings. Treat analyst ratings as third-party opinion, not company fact.

#What does the worked example add up to?

Reliance shows strong sales growth, steady margins, rising cash flow and stable promoter holding. Against that, return on capital is below 10%, interest cost is rising, foreign institutions have cut their stake for almost three years, and the price trend is weak.

Its Tapetide Score was 47 out of 100 on 26 October 2026, in the Average band (45 to 54), at the 37th percentile of 4,485 scored stocks. The score methodology is published openly, and the monthly Tapetide Score report shows how scores moved across the market. This is a summary of reported data, not a recommendation to buy or sell.

#Common mistakes when analysing a stock

• Comparing with the previous quarter. Compare June with last June. Seasonality distorts quarter-on-quarter changes.
• Ignoring other income. Reliance's June 2025 profit included ₹15,119 Cr of other income, about three times its usual level.
• Trusting profit without cash. Check CFO/EBITDA over several years, not one.
• Reading P/E alone. A low P/E on falling earnings is not cheap.
• Using one ratio as a filter. ROE can be high because of heavy debt. Read ROE with debt to equity.
• Skipping shareholding. A falling promoter stake or rising pledge often appears before bad news.
• Treating technical signals as fundamentals. Reliance's moving-average summary read "Strong Sell" on 27 October 2026 while 23 of 24 analysts rated it Buy. They answer different questions.
• Not reading the filings. A large event, such as a subsidiary IPO, can change the investment case before it reaches the numbers.

#How to do this faster

Every number above sits on one Tapetide stock page, free and without sign-in. The screener has 62 ready-made screens across 7 categories to find candidates first. You can also ask TapeAi, for example "Is Reliance's debt rising?", and it answers from the company's reported figures. The free plan includes 10 TapeAi questions a day (50 a month).

If you are choosing where to do this research, see the best stock research websites in India, compared and free stock screeners compared. Tapetide is our product, and those pages list its limits next to the alternatives.

Data on this page is for research and education only and is not investment advice. Tapetide is not a SEBI-registered investment adviser or research analyst. Figures were taken from tapetide.com/stocks/RELIANCE on 27 October 2026.