Lastly, there is the most scientific method of calculation returns, which is the compounded annual growth rate of the stock. This assumes that returns are reinvested in the stock. Let us assume that you bought Havells at Rs.425. After 4 years if the stock price has appreciated to Rs.796, then it translates into a CAGR return of 17% annualized. To this, you can add the dividend yield to get a better picture of returns.

For example: 425 x 1.17 x 1.17 x 1.17 x 1.17 = Rs.796

The only problem in CAGR returns is that it does not distinguish between consistent and inconsistent returns.

NISHA Nayakanswered.