What Are The Main Steps Involved In Equity Research Process?

Equity Research or Independent Equity Research (IER) is the study of equities or stock that is required for the investment purpose. This research is carried out by research analysts. In other words, equity research is the process of gathering information that is required by the investors, traders, as well as the financiers.

However, there are different steps involved in the equity research process. They are-

• Economic analysis- The economic analysis helps to determine the overall usability of the different available resources, comparison between the two resources, opportunity cost, and the scope or feasibility of the investment.
• Industry analysis- This tool is used to evaluate current markets and understanding the complexities. It also helps in identifying the influence of political, economic as well as market factors over the industry.
• Company analysis- It involves examining the different operations of a business and focusing on the different decisions that whether they will benefit in the future or not.
• Financial statement analysis- During this step, all the accounts of the company are evaluated to find out more about the financial status of the company. Furthermore, evaluating everything carefully, the actual financial statement is prepared.
• Financial and Valuation Modeling-This includes valuing the company and its assets.
• Report writing- In this stage the analyst prepares a detailed report after concluding all the above-mentioned processes. This report is accessible to the appropriate shareholders.
• Presentation or Recommendation- After evaluating the whole report, several recommendations are made that can be helpful for the company as well as its shareholders.

The aforementioned are the important stages that are involved in the equity research process.

There are several benefits of equity research and some of them are-

• Improved liquidity- The detailed reports as well as regular updates increases the liquidity and helps the company to trade at fair prices.
• Easy access to capital- It also helps in spreading awareness among the investors and prepares the company for long-term prospects. It also helps the company during different fund-raising programs.
• Enhanced visibility- Helps the company to position themselves with both the domestic and international investors including both retail as well as institutional segments.
• Increased transparency- Helps in creating a friendly image for the company and lifts up the transparency levels.