Investment Research

Most investment research is a conclusion with supporting material attached. The useful version is the opposite: a model you can open, assumptions you can change, and an explicit statement of what would have to be true for the case to work.

Overview

Scope of engagement

• Company initiation research: business model, revenue architecture, unit economics, competitive position, capital allocation record and management’s stated strategy against what the accounts show was actually done.
• Accounting quality review: related party transactions and their trend, auditor changes and qualifications, emphasis of matter paragraphs, contingent liabilities and their movement, the divergence between reported profit and operating cash flow, receivable and inventory days against peers, capitalisation and revenue recognition policy, subsidiary performance masked by consolidation, and promoter share pledging disclosed under Regulation 31 of the SEBI Listing Regulations.
• An integrated three-statement model with driver-based forecasts, scenario switches and a returns bridge separating growth, margin and multiple.
• Valuation across methods appropriate to the business: discounted cash flow with the cost of capital built up rather than assumed, enterprise multiples, sum-of-the-parts where segments differ in economics, and residual income or book multiples for financial companies.
• Sector research: market structure, capacity and utilisation, pricing behaviour, import competition, regulatory change under consultation, and the position of each participant on the cost curve.
• Credit and counterparty research: gearing, interest and debt service coverage, repayment profile, security structure, rating rationale history and the covenant position.
• Screening and target identification across a defined universe, with the filters, thresholds and rejection reasons documented so the shortlist can be audited.
• Ongoing coverage: quarterly updates after results, model refresh and event-driven alert notes on filings that change the case.

Deliverables

• An initiation report with the investment case, the risks that would break it, and the specific conditions that would have to hold for the case to work.
• An accounting quality note listing every flag raised, the evidence for it, and whether it is a measurement issue, a disclosure issue or a governance issue.
• The financial model as a working spreadsheet: historical build, forecast drivers, three statements, valuation and scenarios on separate sheets.
• A valuation range with the method behind each end of it, rather than a single point figure presented without a band.
• A source register listing every filing, database and interview used, with dates.
• A screening output showing every name tested, the filters applied and the reason each rejected name was rejected.

Process

1. Mandate definition

   The decision being supported, the universe, the depth required and the intended readership. Readership matters because it determines the form the report can take and how it may be circulated.

2. Source collection

   Filings, offer documents, rating rationales, regulatory returns and published data gathered and logged. Data is taken from the primary document rather than from a summary of it.

3. Accounting quality screen

   Run before any forecast is built. If the reported numbers cannot be relied on, forecasting them is a wasted exercise and the report changes direction here.

4. Modelling and valuation

   Historical build, driver-based forecast, cost of capital derivation, valuation across the applicable methods, and scenario testing on the variables that carry the case.

5. Channel work and review

   Findings tested against channel input where the mandate includes it, then subjected to internal review by a preparer who did not build the model.

6. Delivery and discussion

   Report and model issued, followed by a working session in which the assumptions are challenged directly rather than presented.

Benefits

Industries served

Coverage depth follows the metric sets that decide value in each sector. In financial services, the work centres on asset quality, provisioning policy against peers, margin decomposition, deposit or borrowing mix and capital adequacy, with restructured and written-off exposures tracked across years. In manufacturing, on capacity, utilisation, realisation, input cost pass-through and the working capital cycle through a demand downturn. In technology and software, on recurring revenue, net retention, customer concentration, cash conversion and the accounting treatment of development spend. In healthcare, on occupancy, case mix, payer terms and the capital intensity of adding capacity.

Typical timeline

Listed companies with current filings sit at the shorter end. Unlisted names, group structures with several subsidiaries, or mandates including channel work run longer.

Engagement model

Single reports are contracted on a fixed fee, quoted once the universe and depth are agreed. Ongoing coverage is contracted as a monthly retainer over a named universe, with the update commitment, the turnaround after results and the notice period recorded in the engagement letter.

Delivery is virtual. Reports and models are issued to the named recipients in the engagement letter and are prepared for that readership. We hold no proprietary positions in the securities covered, we receive no payment from any company we research, and no fee is linked to the conclusion reached or to any transaction that follows. Where a mandate would place us on both sides of a matter, we decline it.

Frequently asked questions

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