Regulated return on equity
Fundamental analysisThe return on equity a regulator permits an asset to earn, built into the allowed revenue alongside approved capital cost, depreciation, operations and maintenance and interest.
In plain terms
The commission sets a return rather than a price, so the analysis moves to the allowance and the disallowances. Regulatory lag is where the margin actually goes: between an input cost rising and a tariff order recognising it, the company funds the gap itself.
Book value growth
Fundamental analysisThe rate at which a bank's book value per share compounds — roughly its return on equity less whatever it pays out.
In plain terms
Over long periods the share price tracks this far more closely than it tracks any single year of earnings.
ROE
Fundamental analysisReturn on equity — net profit as a percentage of shareholders’ equity.
In plain terms
Can be inflated simply by borrowing more. Always decompose it before admiring it.
Equity attributable to owners of the parent
AccountingThe subtotal of consolidated equity belonging to the parent’s shareholders, before non-controlling interests are added to arrive at total equity.
In plain terms
The right denominator for book value per share, and for a return on equity whose numerator is profit attributable to owners. Mixing the two levels gives the flattering answer wherever the non-controlling share of profit is positive, and the pessimistic one where the partly owned subsidiary is losing money.
Equity multiplier
Fundamental analysisAverage total assets divided by average net worth — how many rupees of assets each rupee of owners’ money carries.
In plain terms
The second term in return on equity. It magnifies a bad year by exactly the factor it magnifies a good one, which is why two lenders with the same headline return are not the same investment.
Other comprehensive income
AccountingAlso called: OCI
Gains and losses that Ind AS routes directly into reserves, presented below net profit and excluded from earnings per share.
In plain terms
The half of the year earnings per share never sees. It still lands in equity, so return on equity can improve on an entirely unchanged business simply because a large OCI loss shrank the denominator.
Price to book
Fundamental analysisAlso called: P/B
Market capitalisation divided by book value.
In plain terms
Only compares businesses whose value sits on the balance sheet, and only means something read alongside return on equity.