ValuePickr Forum

How to start with researching a company

Let us say I hear name of a company say XYZ Ltd.
How do start researching about what exactly the company does, the supply chain associated, the competitors it has etc.
In general I want to understand the methodology in which the conventional advisory firms research a particular company.

Thanks in advance.

  1. Go to the website and visit first the about section and then different parts of the website (main, subsidiaries & also groups).
  2. Read the company presentation & prospectus if available.
  3. Read as many ARs (especially Chairman Notes & Management Discussion) and Conference Call Transcripts as you can.
  4. Search for analyst reports in public domain, especially the initiating coverage reports.
  5. Search Google for reports on that company and read as many as you can. Also, search & read if any books are available on the company.
  6. Go through the price actions an compare that with top & bottom line growth to know how the market has reposed faith on the company.
  7. You can also search for histories of dividend, equity dilution etc. and also how they have performed compared to the guidance given (if any).
  8. Also, form an opinion about how other group companies are faring.

All the above steps will help you form a qualitative opinion on the company & management / promoter.

2 Likes

Check the website -> https://www.drvijaymalik.com/. He has given a complete step by step guide on the same.

3 Likes

Adding to sujay85’s list:

  • Get a good understanding of the sector the said company is and its products in the sector. Look for the brand value, competition, how their products are doing in the market compared to competition etc

  • What are the raw materials used to make the products. Is the company having negotiation power with the suppliers? In case of increase in raw material prices, is the company able to pass on the increase to its customers (pricing power)

  • Does the company have good distribution network, sales/service network to reach to the end users

  • How does the company treat minority shareholders?

  • Strength of balance sheet - Debt and working capital management

  • Rating and reports from rating agencies

  • Is the company paying taxes as per the corporate tax laws? Is the dividend paid regularly?

  • Is the company able to generate good cash flows and ability to use the cash generated effectively?

  • Are there any issues seen in accounting ?

1 Like

Yes, this is a very important point. To get information of the competitors, one can read the annual reports (+ investor presentation, Con call transcript) of the listed peers, or do scuttlebutt or find & read analyst coverage for that sector.