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Equity Research Workshop
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Outcome of the Session Course
By the end of the course the participant will be Skilled in:
Handling Microsoft Excel efficiently & Effectively
Industry Analysis
Economic Factor Analysis
Company Analysis
Advanced Financial Statement Analysis
Factoring in Rationale Assumptions
Building financial models
Implementing Discounted Cash Flow Models
Building rational investment thesis
Report writing
Client Interaction
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Session wise Outcome
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Session Outcome
Session 1 -Getting a broader view of Equity Research
-Brushing up the basics
- Economic Factor Analysis
- Industry Analysis
Session 2 -Handling Microsoft Excel Efficiently & Effectively
-Company Analysis
Session 3 - Advanced Financial Statement Analysis
- Factoring in Rational Assumption
Session 4 - Factoring in Rational Assumption
- Building Financial Models
Session 5 - Learning & Implementing Various Valuation Techniques
Session 6 - Building rational investment thesis- Report writing
- Client Interaction
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Session 1
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Outcome of Session 1
Participants will be skilled in:
Getting a broader view of Equity Research
Brushing up the basics
Economic Factor Analysis Industry Analysis
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Prerequisite
To get the most out of the sessions: Participate in the discussion
Do the assignments religiously
Raise your hand if you have a question. Depending upon the time, you
will get an opportunity to ask a question. Or else it will be answered atthe end of the session.
During the concept delivery, if you have any question, please note it
on the notepad.
Sharing anything & everything that is coming in your way of fulfilling
that you are up to fulfilling
Not holding back anything with you. Share it with me and/ or with
your mentor.
Do not be afraid to ask a question.
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Prerequisite
To get the most out of the sessions:
Let us know immediately if something is not working for
you.
Mentoring is not optional.
Do not miss any of the sessions. Please be unreasonable toattend each & every session.
What you get is what you are looking for!
Many of you may be looking for getting some notes,
reference material. You will get that, but its a workshop!
Equity Research will happen here, in the classroom!! So no
attention on going back and understanding it later through
notes.
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Prerequisite
Please make sure that your cell phones are on silent mode.
I hope you have already conveyed it your kith-n-kin about
your participation in the workshop. Only pick up the
urgent calls by stepping outside the classroom.
Please return your name tags at the end of the session.
Most Important, You must Enjoy the Session!
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Questions and Queries, if any?
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Mentoring Structure
You will be allotted mentors in a while & you will be part of a group along
with the mentor.
Next 15-20 minutes, you will interact with the mentors.
In that interaction, please fix up the timings that are suitable for you to
interact with the mentors.
Please keep the mentoring call timings fixed as much as possible.
Participant needs to call the mentor.
Also, please give your respective mentor your expectations from the
session in the sheet that will be provided to you.
Please exchange the phone numbers.
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What Equity Research is ALL
About?
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What Equity Research is ALL About?
Financial Statement Analysis
Economy Analysis
Industry Analysis
Company Analysis
Financial Statement Analysis
Valuation
Recommendations
Fat Salaries
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What Equity Research is ALL About?
Management interactions
Lot of work in Core Finance
Analyst Meets
Investment World
Fascination
Money; Wealth
Excitement
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Equity Research Demo
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Demo
Infosys
We have a Buy recommendation on Infosys and have set a
target price of Rs3,536 indicating an upside of 26% from
current level.
Our Buy for Infosys is driven by
We expect a strong recovery in the US economy leading release of
IT budgets from the US clients in turn leading to revenue growth of
37% (rupee term) and EPS growth of 25%.
Further scope for maintaining EBIDTA margins given multiple
levers like lower utilization rates, scale benefits, onsite-offshoremix, employee mix, etc.
Clear indication of improvement in the billing rates & increasing
mix of high end consulting work
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Demo
Our Buy for Infosys is driven by We have estimated Infosys FY11 EPS of Rs136 indicating a YoY
growth of 25%.
We expect RoE to improve base on better employee utilization &
billing rates leading to improving revenue productivity, although
higher tax rates offset that effect slightly.
Currently, Infosys is trading at 20x our FY11E EPS. This valuation,
we believe is lower compared to its peers that are trading in the
range of 23-27x their 1 year forward EPS. And hence we have
valued Infosys at 26x its FY11E EPS of Rs136 setting the target
price of Rs3,536
What have we factored in: Employee addition of 30,000 for next year
Utilization rates moving up from 72% to 75%
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Demo
What have we factored in:
EBIDTA margins stable 32.5%
USDINR rate of Rs48 (depreciation of 2.2%)
Capital Expenditure of Rs12,000 mn
Tax rates of 22% (as the STPIs will come out of tax free
period)
Equity dilution of 0.3% on conversion of ESOPs
Interest on other income going up as cash is expected
to go up due to improving collection period
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Demo
Revenue Driver
Strong employee addition of 30,000
Improving utilization rates
Increase in the billing rates
US and European economies are improving and
spending on software is expected to increase.
Company management has said that the clients are
quite optimistic about the quick budget releases and
expect new projects to flow in as well. US financial markets have shown early signs of
recovery.
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Demo
EBIDTA Margin Drivers Higher utilization rates leading to higher revenue at the same costs
Better billing rates
Hiring about 70% of freshers of the total 30,000
Hiring includes non-IT graduates that come at relatively cheapercosts with equivalent skills
Increasing proportion of consulting business to bring in higher
margins
Fixed costs projects increasing. Fixed cost projects typically show
higher profitability.
Planning to increase the offshore employee by 2% leading tobetter margins
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Demo
Valuation
We valued Infosys by using two methods:
Relative valuation
Relative Valuation P/E(FY11) = Payout ratio(h) *(1+gh)*
(1- ((1+gh)/(1+keh))^n)/ (keh-gh) +
Payout ratio(n)/ (Ken-gn)*1/(1+Ken)^n
Ke Cost of Equity
Gh: Growth rate
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Demo
Relative Valuation
We have factored in High growth rate of 25%
Stable growth rate of 5%
Beta High growth: 1.1
Beta Stable growth: 0.7
Market premium of 8%
Rfr of 7.5%
P/E (FY11) = 26
And hence we have valued Infosys at 26x its FY11
EPS of Rs136.
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Demo
Risks to our call
US & European markets can go in double deep
recession and the revenue growth could be
adversely impacted. INR may appreciate due unforeseen reasons and
can impact the revenues adversely
Loss of key clients
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So what is equity research
really about? Identifying Undervalued stocks
Timing
Being ready to stand in uncertainty
Knowing your clients requirements
Being creative
Asking right questions, at right time to
right people
Building a distinct view and doing good enough work forhaving conviction about your view
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What it demands from you?
Lot of reading across the spectrum
Lot of interaction with the
companies, their clients, theiremployees etc.
Rigorous work on model making,valuations
A lot of client interaction
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Analysis
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Analysis
We will be using this word a lot through out our discussion.
So, let me tell you what it means by doing Analysis
Analyze what?
Industry
Economy Company
Market share
Company Management
Risk
Business Projects
Share price, volume, pricing etc. etc. etc.
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Analysis
What does it mean by doing analysis?
Reading through the economic, company, industry, annual reports
Talking to company management
Reading about the competitors
Trying to identify the connections between different things that are
happening around
Doing a sample survey
Testing/ tasting the products
Observing the share prices; noting the
Noting the data
Arriving at conclusions
Collecting enough data to build the argument
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Analysis
What will you be left with after doing analysis
Understand new terms & terminologies
Trend
Declining
Increasing Cyclical
Whimsical/ no trend
Insights: You may have some insights about the functional,
technical aspects of the business, industry.
Charts, sensitivity tables, etc.
Conclusions
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Analysis
Three time periods where you can analyze:
Historical State Analysis
Current State Analysis
Future Expectations Analysis
Till the time we do not talk of analyzing the future
prospects of the company, we will broadly talk
about the historical & current state analysis
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Analysis
What is most important is you build your view
about anything & every thing you see and
observe.
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Analysis
Pitfall 1: Tunnels in Research
By the way, Analysis is never going to end.
So, what is most important is that always keep
your analysis: Focused
Time Bound
Or else, you will keep moving in different
tunnels without knowing how much is actuallygetting done.
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Analysis
Pit Fall 1: Tunnels in Research
IT Sector
Telecom Domain
VAS
VOIP
GPRS
Logistics Sector
Reliance to invest into Deccan
Aviation Sector
Indian Airlines to break even by 2015
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Analysis
Handling it All?
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Our Approach to Work
Understand the basic Concept
Understand the terminologies
Understand in depths (Focused & Time
Bound)
Apply to the real life
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Data Collection
Never go for collecting all the data right from the
start.
First focus on the understanding of the concepts and
then collect the data that is required.
There is huge data available out there; you must be
clear and choosy right from the beginning about the
data collection. Because, in the end, you would have
ended up analyzing unwanted, non-relevant, data
resulting into no concrete outcome & time runningout of hands.
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Equity Research Workshop
Be-Do-Have
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Groups
Bulls
Bears
Special Gift for the winner group at the end of
every session
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Where are we Stand?
We got the overview of:
Session prerequisite
We got the mentors with a small mentoring
session what it takes to be Equity Research Analyst
We got broader Equity markets
After this break and before lunch, we will brush up
the fundamentals and get grounded in the basicconcepts of finance.
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After the Break 1
We got the overview of:
Session prerequisite
We got the mentors with a small mentoring
session what it takes to be Equity Research Analyst
We got broader view on the Equity markets
Now, we will brush up the fundamentals and get
grounded in the basic concepts of finance.
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Profit & Loss Account
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Getting Grounded
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Balance Sheet
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Getting Grounded
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Cash Flow Statement
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Getting Grounded
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Time Value of Money
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Getting Grounded
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Where are we Stand?
Post the 1st Break, we have covered the basic
concepts of reading:
Profit & Loss Account
Balance Sheet
Cash Flow Statements
Time Value of Money
After this break, we will look at Economic Factor
Analysis; where in we will see at how different
economic factors affect the equity analysis.
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Economic Factor Analysis
Global Economy
Domestic Macro economy
Demand & Supply Shocks
Government Policy
Business Cycles
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Economic Factor Analysis
Let us understand how it emerged in the first
place.
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Economic Factor Analysis
Global Economy
The top-down analysis of a firms prospects must
start with the global economy. The international
economy may affect the firms export business,
the price competition it faces from its competitors
or the profits it makes on the investment abroad.
Certainly, there is a considerable variation in
economic performance across the countries.
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E i F t A l i
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Economic Factor Analysis Global Economy
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Stock Market ReturnsGrowth in Real GDP Local Currency $ Terms
China 11.2 -7.6 -7.6
Hog Kong 3.3 -20.0 -20.0
India 5.8 -0.1 +1.0
Indonesia 3.8 1.4 18.7
Singapore 3.0 -20.7 -15.6
South Korea 5.8 -14.9 -5.7
Taiwan 4.2 -19.7 -19.1
Venezuela -16.7 24.0 -41.2
Argentina -10.1 98.3 -37.5South Africa 3.0 -20.7 19.5
Russia 4.3 50.9 45.7
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Economic Factor Analysis
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Global Economy
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Economic Factor Analysis
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Global Economy
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Economic Factor Analysis
Global Economy Chart of Infosys, Nifty and Nasdaq
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Economic Factor Analysis
Global Economy
Political Risk
We all remember what happened in 2003 to the stock
markets when BJP lost Loksabha election to congress
on 16th May.
In 1997, the Hongkong market extremely sensitive to
the political developments leading up to transfer of
governance to China.
Iraq war
Etc.
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Economic Factor Analysis
Global Economy
Exchange rate: The exchange rate is the rate at
which the domestic currency can be converted
into a foreign currency.
Currency Appreciation: Good for importers/Bad
for exporters
Currency Depreciation: Good for exporters/ bad
for importers
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Economic Factor Analysis
If GBP depreciates against USD & USD
appreciates against INR, what will happen to
exchange rate between GBPINR?
INR will_______________ against GBP
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Economic Factor Analysis
Domestic Macro Economy
The macro economy is the environment in which
all the firms operate.
The price-earnings ratio vary with the factors suchas interest rates, risk, inflation rates, and other
variables.
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Economic Factor Analysis
Domestic macro economy GDP: It is a measure of economys total
production of goods & services
Industrial Production: Another measure is the
Industrial Production. It is more focused on themanufacturing side of the economy.
Employment: Unemployment rate is a percentage
of total labor force (i.e. either who are working or
actively seeking employment) yet to find work. It
basically tells the extent to which the economy is
working to its fullest capacity.
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Economic Factor Analysis
Domestic Macro Economy
Inflation: It is a rate at which a general level of
prices is rising. High rates of inflation are generally
related to over heated economies. Here, the
demand for goods & services is outstripping the
productive capacity.
The unemployment vs inflation dilemma
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Economic Factor Analysis
Domestic Macro Economy Interest Rates: Higher interest rates reduce the
present value of the future cash flows, there by
reducing the attractiveness of the investment
opportunity. Moreover, higher interest rates arealso disincentive for the corporate as they will
hesitate to borrow at higher cost (even for
expansion)
Moreover, demand for housing, durable goods,
vehicles, etc. is also sensitive to the interest rates
fluctuations.
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Economic Factor Analysis
Domestic Macro Economy
Budget Deficit: The budget deficit of the
government is the difference between government
spending and revenues. Any budgetary shortfall
must be offset by government borrowing. Large
amounts of government borrowing can force up the
interest rates by increasing the total demand for
credit in the economy. This can also lead to
crowding out effect leading to higher interest ratesand chocking off business investments.
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Economic Factor Analysis
Demand & Supply Shocks
A demand shock is an event which affects the
demand for goods and services in the economy.
Example for positive demand shock are reduction
in taxes, increase in money supply, increase in
government spending, or increase in foreign
export demand.
Demand shocks are usually characterised by
aggregate output moving in the same direction as
that of interest rates & inflation.
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Economic Factor Analysis
Demand & Supply Shocks A supply shock is an event that influences the
production capacity and cots.
supply shock is usually characterized by aggregate
output moving in opposite direction of inflationand interest rates.
Where can you use this analysis?
If there is an indication of tightening of money supply,
you might want to avoid industries such as automobileproducers because it will be affected due to increase in
interest rates.
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Economic Factor Analysis
Government Policies
Government has two broader tools those that
affect the demand for goods and services and
those that affect the supply.
Recently, most of the focus has been on demand
side of the story
The focus has been on government spending, tax
levels, and monetary policy.
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Economic Factor Analysis
Government Policies Fiscal Policy
It refers to the governments spending and tax actions
and is part of demand-side management. Fiscal policy
is probably the most direct way to stimulate or slow theeconomy.
Increases in the govt spending inflate the demand of
goods & services & vice-a-versa.
Similarly, increases in taxes implies deflate in the
demand of the goods & services. However, the execution of the fiscal policies is rather
very slow.
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Economic Factor Analysis
Government Policies
Monetary Policy It refers to the manipulation of money supply to affect the macro
economy. It typically works through its impact on the interest
rates, ultimately increasing the consumption & demand. Increase in money supply will reduce the short term interest rates
and will increase the consumption & demand. Over long period,
however, higher money supply only leads to higher price levels and
does not have any permanent impact on the economic activity.
And it becomes a difficult balancing act. Thus, stimulation/
inflation trade-off is implicit. Open Market Operations: The Govt. buys & sells securities
increasing or decreasing the supply of money in the economy.
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Economic Factor Analysis
Government Policies
While the Fiscal Policies are more direct in nature,
it takes longer to implement.
Impact of Monetary policies is more of a round
about and works largely through its impact on
interest rates.
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Economic Factor Analysis
Concept Check Question 2
Suppose the government wants to stimulate the economy
without increasing interest rates. What combination of
fiscal and monetary policy might accomplish this goal?
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Economic Factor Analysis
Government Policies
Supply Side Policies
The supply side policies treat the issue of the
productive capacity of the economy. The goal is to
create an environment in which workers and owners ofcapital have the maximum incentive and ability to
produce and develop goods.
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Economic Factor Analysis
Concept Check Question 3
Large tax cuts were followed by rapid growth in GDP. How
would demand-side and supply-side economists differ in
their interpretations of this phenomenon?
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Economic Factor Analysis
Business Cycles
The economy recurrently experiences periods of expansion
and contraction, although the length & depth can be
irregular.
This recurring pattern of recession & recovery is called asBusiness Cycles.
A Peak is the transition that occurs at the end of the
expansion and lasts till the start of the contraction.
A Trough occurs at the bottom of a recession just as the
economy enters a recovery.
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Economic Factor Analysis
Business Cycles
Cyclical Industries:
As the economy passes through the different stages of the
business cycles, the relative performance of the industries is
expected to vary.
At the trough, when the economy just begins to recover, the
industries that are sensitive to economic recovery, like Auto, would
tend to outperform. E.g. Automobiles, durable goods industries.
Because purchase of such goods can be deferred during recession,
the sales of such industries are sensitive to the macroeconomic
conditions.
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Economic Factor Analysis
Business Cycles
Cyclical Industries:
Other cyclical industries are the producers of the capital goods i.e.
the goods used by other firms to produce their products. When
the demand is slack, few companies will be expanding and
purchasing capital goods. So, the capital goods industry bears the
burnt of the economic slow down but does well in expansion.
Defensive Industries:
These are the industries that are least sensitive to the economic
cycles. These industries include food producers & processors,
pharmaceuticals and public utilities. These industries willoutperform at the time of recession.
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Economic Factor Analysis
Economic Indicators
Leading Indicators
Coincident Indicators
Lagging Indicators
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Where are we Stand?
Post the 2nd Break, we have covered Economic Factor
Analysis:
Global Economy
Domestic Macro economy
Demand & Supply Shocks
Government Policy
Business Cycles
After this break, we will look at Industry Analysis and why &
how it is important from the perspective of Equity Analysisand further finer aspects of the same.
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After the Short Break 2
Post the 3rd Break, we have covered Economic FactorAnalysis:
Global Economy
Domestic Macro economy
Demand & Supply Shocks Government Policy
Business Cycles
Now, we will look at Industry Analysis and why & how it is
important from the perspective of Equity Analysis and further
finer aspects of the same.
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Industry Analysis
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Industry Analysis
Defining an Industry
Sensitivity to a Business Cycle
Operating Leverage
Sector Rotation
Industry Life Cycles
Industry Structure & Performance
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Industry Analysis
Defining an industry: It becomes a very crucial
activity and can be difficult at times.
IT-ITES
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Industry Analysis
Sensitivity to the Business Cycle Given the state of the economy, it is very crucial to identify
implications to individual industry.
Not all industries are equally sensitive to the business cycles. For e.g.
automobile manufacturing industry & cigarettes.
Clearly, cigarettes industry is independent of the business cycle.
Demand of cigarettes does not seem to deflect despite the economic
slowdown.
Cigarette consumption is largely led by habit and it forms small
enough part of most of the budgets.
Auto production, by contrast is different. Most of the people would
defer their decision to go for auto purchase till their income level is
higher.
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Industry Analysis
Sensitivity to the Business Cycle
Three things will determine the sensitivity of the
firms earnings to the business cycle
Sensitivity of Sales
Degree of operating Leverage
Financial Leverage
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Industry Analysis
Sensitivity to the Business Cycle
Sensitivity of Sales
Necessities will show little sensitivity to the business
conditions.
Examples of such industries are: food, drugs, and medicalservices
Other industries that show low sensitivity are those whose
demand is independent of income. These incluse tobacco,
movies; because it is observed that people substitute movies
for more expensive sorts of entertainments.
Machine tools, steel, autos, and transportation are
highly sensitive to the state of economy.
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Industry Analysis
Sensitivity to the Business Cycle
Degree of Operating Leverage Operating Leverage: A firm with higher proportion of fixed costs
has higher operating leverage.
Firms with higher operating leverage are more sensitive to theeconomic conditions.
Firms with higher operating leverage will see higher changes in
profitability vis--vis it sales.
DoL = (% Change in Profits)/ (% Change in Sales)
So, if the DoL is 2, then for every 1% change in sales, the profits
move (up or down) by 2% in the same direction.
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Industry Analysis
Sensitivity to the Business Cycle
Degree of Operating Leverage
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Recession Normal Expansion
A B A B A B
Sales (Nos mn) 5 5 6 6 7 7
Price per Unit (Rs) 2 2 2 2 2 2
Revenue (Rs mn) 10 10 12 12 14 14
Fixed Costs (Rs mn) 5 8 5 8 5 8
Variable Costs (Rs mn) 5 2.5 6 3 7 3.5
Profits (Rs mn) 0 (0.5) 1 1 2 2.5
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Industry Analysis
Concept Check Question 4 What will be the profits in the three scenarios for Firm C
with fixed costs of Rs 2 mn and variable costs of Rs1.5 per
unit? What are your conclusions regarding operating
leverage?
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Industry Analysis
Sensitivity to the Business Cycle
Financial Leverage
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Industry Analysis
Sector Rotation
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Financial Stocks Excel Consumer Durables Excel
Capital Goods Excel
Basic Industries Excel
Consumer Staples Excel
Contraction ExpansionPeak
Trough
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Industry Analysis
Peak
At the peak of the business cycle, the economy
would be over heated with high inflation and
would be characterized by higher interest rates
and pricing pressures on basic commodities
This might be good time to invest into firms
engaged in natural resource extraction and
processing such as minerals or petroleum.
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Industry Analysis
Contraction Phase: In the contraction or recession, one would expect
industries that are less sensitive to the economic
conditions. For example pharmaceuticals, food, and other
necessities. At the height of contraction, the financial firms will be hurt
by the shrinking loan volumes and higher default rates.
Towards the end of the contract phase, however, financials
could do well as contraction would induce lower inflation
and interest rates.
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Industry Analysis
Trough
It is the point at which many of the firms may be
looking forward to investing in to cater for the
future demand.
It is the phase where you should invest into capital
goods industry such as equipments,
transportation or construction.
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Industry Analysis
Expansion Phase:
It is the phase where consumer durables would do
well. Luxury businesses, automobiles would do
well. In this phase, banks will also do well as loans
volume would go up and default rate would below.
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Industry Analysis
Concept Check Question 5
In which phase of the business cycle would
you expect the following industries to enjoy
their best performance? News paper
Machine tools
Beverages
Timber
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Industry Analysis
Industry Life Cycle Look at industries like Biotechnology you will find higher
rate of investment, higher rates of return and lower
payouts
Versus, look at the industries like utilities, you will findlower investments, modest rates of return and higher pay
out.
New industries will always offer high risk/ high returns kind
of profile.
Where as, the mature industries will be cash cows andwill be low-risk, low return but higher dividends proposal.
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S1
S2
S3
S4S5
S1 : Pioneering Development S2 : Rapid Accelerating Growth
S3 : Mature Growth S4 : Stabilization & Market Maturity
S5 : Deceleration of Growth and Decline
Industry Analysis Industry Life Cycle
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Industry Analysis
Peter Lynchs Approach
Slow Growers Large & aging companies that will only grow at a rate slightly
higher than economy. They have matured from their high growth
phase and have steady cash flows and pay generous dividends.
Indicating the companies is generating more cash that can be
profitably invested in the business.
Stalwarts
They grow faster than the slow growers, but are not in
very rapid start up phase. These tend to be non-cyclicalindustries
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Industry Analysis Peter Lynchs Approach
Fast Growers Small and aggressive firms have growth rates in the range of 25-
40% annually.
Cyclicals
Companies whose profits expand and contract with the business
cycles. Turnarounds
These are the companies that are in bankruptcy or soon might be.
If they recover from this, they can offer tremendous returns.
Asset Plays
There could be companies possessing assets that are not getting reflectedin the current stock . It could be a piece of real estate, some apparently
intangible asset that could take the stock value to different heights.
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Porters FiveForce Model
Industry Competitors
(Rivalry
among Existing
firms)
Potential Entrants
Suppliers Buyers
Substitute
Bargaining Power
of Suppliers
Bargaining Power of
buyers
Threat of
Substitutes
Threat of new
entrants
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Important Facets of Industry Analysis
Structural Changes in the Economy
Structural changes are widespread or long term changes of the fundamental
structure of the economy
Eg: The Liberalization of the Indian Economy
Globalization a structural change in the world economy
The changing of US economy from a manufacturing giant to a service oriented economy
The down fall of communism in Soviet is a structural change for the economy
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Effect of Inflation
Higher Inflation causes uncertainty about future prices and cost , causes
Higher Interest rates and is harmful for firm as their costs increase.
But on the contrary Inflation is good for Natural resourceindustries, Industries with high operating leverage or with high financial
leverage.
Interest rates
Higher Interest rates are harm full for the Banking and Financial sector
and the construction sector but they increase the income of retirees
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Study of Demographics
Demographics includes the population growth and age distribution
along with this it also includes geographical distribution of
people, changing ethnic mix in the society and changes in the income
distribution
Eg: The expected decline in workforce in Japan in the next 15 years
due to changes in priorities.
Study of Lifestyle
Lifestyles deal with how people live , work consume, educate themselves as
the consumer behavior gets affected by trends and fads.
These things affect industries like the housing, hospitality automobiles,
retail financial services and entertainment industry
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Technology
Technology implementation across industries can affect the a large part of the
economy .
Eg : Carburetors are out of demand as fuel injection technology was introduced.
Companies generate their own power , so demand of power in industrial area
goes down.Internet has brought down the cost of advertising drastically.
Study of Regulations and Politics
Political change reflects social values , social trend gets converted in to a law
or tax.
Eg : The government controls prices of life savings drugs
Industry Analysis
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Consumer SentimentsConsumer spending has a large impact on the economy and consumer
spending is a function of consumer sentiments . Optimistic consumers are
good for the economy and affect various sectors
Eg: Spending in Cars, Cloths, White goods and borrow for house purchase etc
International Economics
International economies are constantly interacting with each other which
affects the value of currency of the nation. The exports and imports gets affected.
Creation of free trade zones and International communities for trade benefit the
companies present in those areas those areas
Eg : Fluctuation of the Indian rupee or the US dollarEuropean community , North America Free trade zone, SAARC etc.
Industry Analysis
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Study of Global Industry
Studying scenario in the global industry helps to understand the developmentand scope for the domestic industry, by introduction of multinational players in
the market and the market dynamics change
Eg: The Automobile sector witnessed a rapid change due to the foreign car makers
entering India.
Relation of the Global and Local Industry
The study of domestic industrys interaction and dependence on the global
players helps us to understand the revenue expectations from the industry in the
short term and long term.
Domestic Industrys presence in global area brings revenue in foreign currency
Eg : Indian Computer manufacturers depend completely on foreign companies like Intel
for their core material requirements
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History of the Industry in world and India
The complete knowledge of the industry right from its inception and major milestones in
World and India gives a deep understanding about the industry and helps to spot trends
and major shift in the industry
Current Happenings in the Industry
An update about the happenings in the industry helps to understand the future
direction of the industry and growth prospects of the industry
SWOT
SWOT analysis helps to have a clear picture about the industrys Advantage
points and the areas where it can face problems in future. This study helps to
understand the effect of various events from the Industrys perspective.
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E i R h W k h
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Equity Research Workshop
Be-Do-Have
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Before We End todays Session
Please carry your homework sheets with you
Please carry your soft data on Pen drives, if
you require
Please return your name tags while going I am around to ask any questions you may
have
Make sure that you are calling your mentors
on the time decided
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Thank You
Session 1 Ends 6pm