Let's understand MTF from below examples 

With MTF, ( assuming margin requirement of the scrip is 25% upfront ), you will only be required to pay ₹250 per scrip. Hence, you would be able to buy 40 quanity of the stock ( 40 x ₹250 = ₹10,000 )

So in this case, you were able to buy 30 extra quantities of the same stock, with the same amount. ( The additional, amount of ₹30,000 , was funded by us, the broker )

Now, let's consider two scenarios:

Scenario 1: The value of the shares increases If the value of the shares increases over time, let's say to ₹1500, you decide to sell them. After selling, you repay the borrowed amount to your broker, along with any interest accrued. Here's how the calculation would look:

You sell the shares for ₹1100 Sell value would be ₹1100 x 40 = ₹44,000 Your initial investment was ₹10,000, and the borrowed amount was ₹30,000 Hence profit would be ₹44,000 - (₹10,000 + ₹30,000) = ₹4,000 That is a whopping 40% profit.

Without MTF, you would have only 10 shares, meaning, only 10 % profit.

Hence, you can see, your profit became 4x due to MTF!

Keep in mind, that the borrowing rate for MTF is a mere 12% per annum. That means, adjusting the profit for interest paid, assuming you held the stock of 30 days, ( at 0.033% per day for ₹30,000 borrowed amount) would be roughly ₹30.

This can be used to find the adjusted profit %, that would still be almost 4x if MTF was not used!

Scenario 2: The value of the shares decreases If the value of the shares decreases instead, let's say to ₹900, and you decide to sell them, here's how the calculation would look: You sell the shares for ₹900 Sell value would be ₹900 x 40 = ₹36,000 Your initial investment was ₹10,000, and the borrowed amount was ₹30,000 Hence loss would be ₹36,000 - (₹10,000 + ₹30,000) = - ₹4,000 That would be a loss!

So be carefully while deciding your investment stocks and timelines accordingly!