What is Equity Research?

1. Presented By :- Enroll. No.
 Dhiraj Loncha 127460592028
 Hardik Mishra 127460592059
 Pankaj Mishra 127460592061
 Ronak Patel 127460592101
 Varsha Sharma 127460592141

2. What is Equity Research?
 …an investment advisory service
 Equity research is a study of equities or
stocks for the purpose of investments.
 Purpose
Purpose of equity analysis is to study
companies, analyze financials, and look
at quantitative and qualitative aspects
mainly for decision: Whether to invest or
not.

3. Equity research process
Equity research process comprises of multiple steps.
1. Economic Analysis
2. Industry Analysis
3. Company Analysis
4. Financial Statement Analysis
5. Financial and Valuation Modeling
6. Report writing
7. Presentation or recommendation

4. Application
Equity research is used in many areas. Primarily, the
research is used for the following purposes:
1. Investment evaluation
2. In Mutual Fund industry
3. For M&A deals
4. Financial Publications
5. Charitable endowments

5. Skills required for equity research
 Excellent financial analysis and
equity research skills
 Global and business analysis
knowledge
 Presentation and writing
capabilities
 Correct judgment

6. Equity Research Benefits
 Improved liquidity: Consistent research, with detailed initiation reports and
quarterly updates, increases liquidity and helps the company to trade at fair prices
 Easy access to capital: Generates awareness among investors and positions the
company as a long-term prospect during fund-raising programmes
 Enhanced visibility: Positions the company to domestic and international
investors in both the retai l and institutional segments
 Eases management bandwidth: Frees up the company's top management and
investor relations team's bandwidth
 Increased transparency:Creates an investor-friendly image for the company, and
raises transparency levels

7. Equity research firms in India
 CRICIL
 Almondz
 Emkay Research
 India Infoline
 PINC Research
 Motilal Oswal
 Prabhudas Liladhar
 Citigroup India
 DSP Merrill Lynch
 JP Morgan Equity
 CLSA
 Morgan Stanley

8. Job Nature of Equity Research Analyst
 Gather & analyze data from various sources (company documents,
SEC/regulatory materials, etc.
 Provide primary analytical support for analysts/senior analysts
 Perform financial and valuation analysis, & generate financial
models/forecasts
 Work closely with primary and secondary markets sales teams
worldwide to ensure the maximum benefit of their daily analysis for
clients

9. Cont…
 Writing company & industry reports & notes on companies under
coverage
 Write research reports evaluating earnings results, regular company
updates based on meetings with management and development in
the market place
 Build and maintain earnings & cash flow models based on
independent research, company sponsored earnings conference calls
and discussions with senior management
 Recommend investment strategies based on company fundamentals,
change in valuation and company and industry announcements

10. Cont…
 Interact with institutional & retail
salespeople, and institutional clients
 Conduct intensive company and
industry research through analysis of
financial statements, markets,
competitors, interaction with
management, trade associations, etc.
 Monitor company news and events,
and maintain research databases

11. How It All Works, and How the Sell-side
Makes Money
Sell-side Buy-side
Analyst
Sales Desk
Portfolio Manager
Or Analyst
Research analyst has information on Q4 Housing Starts, which will be a boon to
Home Depot and Lowe’s.
Information is given to Sales desk during morning call. Sales Desk calls Buy-side
Client with Analyst recommendation

12. How It All Works, and How the Sell-side
Makes Money
Sell-side Buy-side
Analyst
Sales Desk
Portfolio Manager
Or Analyst
Portfolio manager discusses idea with Sales Person. Is interested in getting exposure
to the group; can’t decide between HD or Lowe’s
PM calls Analyst to discuss HD and Lowe’s. Analyst provides opinion on which is a
better Buy right now

13. How It All Works, and How the Sell-side
Makes Money
Sell-side Buy-side
Analyst
Sales Desk
Portfolio Manager
Or Analyst
Buy-side trader
Based on Analyst feedback, PM decides to buy shares of Home Depot. Calls her firm’s
trade desk, places order for 100,000 shares.
Tells trader to buy stock through Sell-side firm

14. How It All Works, and How the Sell-side
Makes Money
Sell-side Buy-side
Analyst
Sales Desk
Portfolio Manager
Or Analyst
Buy-side traderTrade Desk
Buy-side trader calls sell-side trade desk and places order for 500,000 shares of Home
Depot. Sell side trader “works the order”. Finds seller of 500,000 shares at $50, takes
shares and sells to Buy-side desk for $50.04.

15. How It All Works, and How the Sell-side
Makes Money
Sell-side Buy-side
Analyst
Sales Desk
Portfolio Manager
Or Analyst
Buy-side traderTrade Desk
$20,000
Commission of $20,000 on HD trade is split amongst the three areas that contributed to
the trade (Research, Sales, Trading).

16. Expected Career Path
 Analyst Trainee
 Equity Analyst
 Senior Analyst
 Assistance Manager
 Managing Director
 CFO
 CEO

17. Equity Research - Teams
 Most teams have 2-5 people
◦ Senior Analyst / Managing Director
◦ 2 Associates (MBA or CFA)
◦ 1 Analyst (2 years out of undergrad)
 Teams are located at firm headquarters (typically
NYC)
◦ Some teams located in other areas for strategic reasons (e.g.
San Francisco = Software)

18. Salary of an Analyst:
 Typically hired directly out of top undergraduate universities,
this crop of bright, highly motivated candidates does the
financial modeling and basic entry-level duties associated
with any corporate finance deal.
 When it comes to analyst pay, much depends on whether the
analyst is in a particular state of US as an example, New York.
 In this City, salary often begins for first-year analysts at
$45,000 to $55,000 per year, with an annual bonus of
approximately $30,000.

19. Equity research report

20. Equity research report

21. Equity research report