NISM SERIES – XV: RESEARCH ANALYST CERTIFICATION BY- CA NITIN GURU

Chapter 12: Qualities of a Good Research Report

 Qualities of a good Research Report
Research report is a multipurpose document and does the following:
Presents an investment idea – Provides market perspective – Detailed company analysis.
The communication aspect of an analyst’s job is as important as analysis. The process of converting
numbers to views does demand for the certain qualities. Certain ground rules which one can follow to
make a good report.
 Clarity of idea
 Simplicity of delivery
 Presenting the arguments clearly
 Narrative structure
 Create customized reports according to the reader type

 Writing a good research report – Planning, Drafting, Editing:

The major sections of a research report include:
Company business, peer group analysis, shareholding pattern, key strengths, key concerns, industry
overview, company fundamentals, key financial indicators and financials. The writing process has to be
planned. Work should begin on each section. All the sections of a research report are fact based and
therefore filling them is more of a copy-paste function

 Fact- based sections in research report:

Peer group analysis, shareholding patterns, company fundamentals, key financial indicators and
financials.
Source of Information: Annual reports, quarterly reports, calculations.

 View-based section in research report:

Company business, Key strengths, key concerns, Industry overview.
Source of information: Communication with management, personal understanding of the business and
industry.

 Things to watch out:

Few reasons that are listed out for failure of a research report:
 Unnecessary details
 Long Sentences
 No proper structure
 Inconsistent views
 Complex language

 Rating Conventions
In financial markets, while rating stocks, various conventions are used by research analysts. These
recommendations are typically made to reflect the analyst’s view on the total returns that the security

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NISM SERIES – XV: RESEARCH ANALYST CERTIFICATION BY- CA NITIN GURU

will make over a specified time horizon, or the returns of the security relative to the returns of the
market or to the peer group. Different research agencies may have different definitions for each term.
 Buy
 Overweigh
 Hold
 Underweight
 Sell

 Checklist Based Approach to the Research Reports

To ensure consistency in the decision making process, it becomes imperative to note down important
decision drivers in a disciplined and committed manner. Accordingly, checklists could be a great way
for analysts to stay disciplined and methodical when it comes to researching new ideas, maintaining
an existing portfolio and existing positions.