Module 8 ยท Building a Portfolio and Managing Risk
Due diligence is the systematic research you do before trusting a company with your money.
Due diligence means verifying a company before investing: its business, financials, management, governance and valuation.
Check the numbers in the annual report, read what management says, look at the shareholding pattern, and compare the valuation with peers.
It is not about finding a perfect company - every company has flaws. It is about knowing the flaws before you commit and deciding whether you are comfortable with them.
Example: Laurus Labs
Before investing in a mid-cap like Laurus Labs, due diligence means checking its API pricing, debt levels and CDMO pipeline - not just the growth story in the headlines.
The purpose of due diligence is to:
What is one question you would ask before investing in any company?