EQUITY RESEARCH MANAGEMENT - How equity valuation focuses forecasting perspective

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EQUITY RESEARCH MANAGEMENT

CASE STUDY : 1

Company analysis is the final phase of E.I.C. approach to equity valuation. It involves analysis of the financial aspects relating to a specific company to arrive at an estimation of the value of the business or its equity shares. Trend analysis, ratio analysis (EPS, PE, Book Value per share, Return on Networth, Dividend cover Profitability of shares, debt equity ratio, etc) help us to get a clear understanding of the financial position of a company.

Q1) Define the term Book Value.

Q2) Explain the importance of cash flow statement?

Q3) Explain the approach is needed while deciding on investing in the stock of company?

Q4) Define the term company analysis?

CASE STUDY : 2

Mr Abhiram is the owner of a small shop in Mumbai. He wishes to enter into equity market with the investment of Rs 50,000 for the period of one year. But he does not know anything about the stock market. But his friend Shekhar has given him the advice that without knowledge do not enter into the equity market. He told him to go to the financial consultant or equity analysis consultant and then invest.

Q1) Why Equity Research is important?

Q2) What does equity research entail?

Q3) Explain the job of an equity analysis in detail?

Q4) Do you have suggestion to Mr Abhiram about his decision?

CASE STUDY : 3

Equity valuation focuses on analyzing business from valuation and forecasting perspectives. It begins with the analysis of economy, industry and company (E.I.C.). In economic analysis, the performance of economy at both macro and micro level is analysed to understand the businesses for forecasting and valuation of businesses. Macro-economics deal with aggregate variables of an economy like the output, its composition and rate of growth, level and growth rates of money supply, employment, investment, exports, imports, etc.

Q1) Explain the inter-relationship between Stock markets and macro-economic performance?

Q2) Why do analysts care macro view and micro view?

Q3) Comment current Indian macro-economics scenario?

Q4) How equity valuation focuses forecasting perspective?

CASE STUDY : 4

We live in a relative world where the value of everything is in relation to everything else. I drive a big ear, so and am relatively better than my neighbor but compared to my boss’s car, I am relatively not well placed. That’s the way things are and it is easy to carry such biases in equity valuation too. The concept behind relative valuation is simple and easy to understand, the value of a company is determined in relation to how similar companies are priced in the market.

Q1) Explain the steps a simple relative valuation exercise for a publicly listed company?

Q2) Discuss the advantages of Relative valuation?

Q3) Explain the disadvantages of Relative valuation?

Q4) Which are the few things that an alert analyst has to keep in mind while working with relative valuation?

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aravind.banakar@gmail.com

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ARAVIND – 09901366442 – 09902787224