Sectoral Report writing structure

1. First let’s look at the statistics of the sector like production volume, capacity, global positioning of your
country, contribution to GDP, employment generation, Top 10 global companies, top 10 companies in
the country,
Industrial Situation of last at least 2 decades (5 yearly interval data (2000 data, 2005,2010,2015 data &
then production data of last 5 year…every year like 2016,17,18,19,20,21 & Current years available
monthly or quarterly data) basically historical data.

2. Now let’s discuss about the product or service sold or rendered by the companies in the sector e.g.
About the steel sector the core or base product that’s sold is the finished steel. Now there may be
differentiated products like hot rolled coil, cold rolled coil, iron ore pallets, sponge iron etc. study each
of them product wise …

3. Then let’s get into manufacturing process like how do they produce? Owned Manufacturing, Contract
Manufacturing, Franchisee, License in license out, PPP Model, Royalty Based model. For steel
Integrated steel plant or non-integrated steel plant, scrap-based steel plant? Plus understand the
entire manufacturing process.

4. Key growth drivers … find them out … like why steel volume may go up? Who are the consumers? Why
they will consume the product more or less in future? For example, steel’s demand is dependent on
the performance of Automobile sector, real estate, infra, capital goods sector because the are the key
consumer of the steel. And find out why there should be a growth or de-growth in these sectors which
will eventually impact the demand for steel.

5. Now discuss about the Market structure like whether it’s a perfectly competitive market or a
monopoly, duopoly, oligopoly etc. It’s very important because it determines the profitability,
competitiveness, entry barriers, pricing power of the companies operating in the market.

6. Porter’s five forces analysis is a great analysis if done properly…it’s not just a foolish theory you’ve to
write as you used to write in school or college… and believe me it’s not at all easy…

Hence, I recommend you to modify it in this manner:

• Threat of new entry + is it easy to entire into the market? Initial capex required for greenfield and
brownfield project? Entry barriers? Impact of new entry in terms of price, market share gain or lose
etc.
• Buyer Power + do your buyers have any bargaining power? Generally, if there’s huge competition in
the market then in order to sustain the market share you may have to sacrifice your margin.
• Threat of substitution: example automobile sector EV, renewable energy
• Supplier power: does your supplier has dominance over the market? Then you may not get enough
credit period, delay in supply, low bargaining power of yours, lower margin … but if your company has
backward integration then there’s assurance of quality, price hence better control over the margin.
 It also includes whether for supply are you dependent on import? If yes then due to anti-dumping duty
and other duties… export ban… other geo-political issues can disrupt your line of supply… check them.
For palm oil if you remember what happened in April 2022-June2022… Russia Ukraine war resulting
aluminum, coper, crude price hike etc…
• Competitive rivalry: Perfectly competitive then cut throat competition, monopoly … then you know …
have fun …

7. Now the next most important thing is to understand and analyze the trend of the raw material price …
finished product price like in 2020-2022 super boom in steel prices… their reason like supply side
constraint, deferred consumption, market structure disruption like China’s cut down in the production
level due to pollution etc.
8. Research and developmental spend in a sector and R&D spend of a company as a % of revenue
indicates how dynamically the industry changes and in order to sustain it’s position in the market how
innovation plays an important role.
9. Government Initiative works as one of the most important catalyst in any sector for re-rating and
boosting. How Government in India is taking initiative to boost ethanol blending, green hydrogen,
National steel policy etc. are the things you must look at. Plus tax relief, PLI and other schemes, Bharat
mala, PM Awas Yojna, Nal se jal, National infrastructure pipeline projects etc. works as a Tailwind for
the industry.
10. Last thing ESG factors as now a days it’s becoming very important. ESG means Environmental Social
Governance so briefly cover this as well.

** There’s no fixed limit on number of pages for writing a good quality Sectoral Report.
** There should be no repetition of information in the report. There should be no biasness
in the report.
** You’re free to include better inputs in the report.
** While you’re writing a Sectoral report always keep in mind your report may become a
basis for crores of rupees of investment. If on the basis of your report someone invests and
incurs crores of rupees of loss will you be ready to compensate that loss? This money may
belong to some businessmen, employees, senior citizens or any common man … anyone
who’s let’s say of the age 60 invested in a mutual fund where you’re working as a research
analyst loses money which he/she saved for emergency and it was your faulty research
which is responsible for this loss… now think how would you feel like…so please make
this equity research report keeping that in mind.