Related-party transactions are not always harmful, but they deserve careful review because they can shift value between connected entities. Start with the annual report notes and identify sales, purchases, loans, guarantees, leases, and payments to promoter-linked businesses. Compare each amount with revenue, profit, and net worth to judge materiality.

Look for repeated transactions without a clear commercial reason, unusual pricing, or growing balances that remain unpaid. Also read audit qualifications and board approvals. A clean analysis should explain who benefits, whether terms appear comparable with market rates, and how the transaction affects minority shareholders.

Best Application for Stock Analysis in India | StockTool.AI

Checking Related-Party Transactions Before You Invest