Research Analyst Study Guide | NISM Study Notes

Question Marks Business segments in a fast growing market, but having low market share. The right strategies and investments can help the market share of the business grow, but they also run the risk of consuming cash in the process of increasing market share and in the end turning out to be not enough cash generating
Dogs: Business segments, which have slow growth rates and intensive competitive dynamics which lead to low generation of cash are categorized as Dogs.
Structure Conduct Performance (SCP) Analysis: Another method of analyzing industries is to look at the industry structure (monopoly, oligopoly), its conduct (commoditized or specialized, seasonal or round the year, cyclical or noncyclical etc.) and finally its performance (RoE, RoIC, WACC, etc.). Structure, Conduct, Performance (SCP) analysis approaches the industry evaluation exactly with this categorization. SCP analysis may be seen as extension of Porter's model where probably first two points structure and conduct were captured. Under SCP model, one also goes into the financial dimension of industry from analysis perspective
Critical Business Drivers/Success Factors - Each industry/sector has a specific set of factors which affect its profitability and prospects. For example: Retail sector closely monitors footfalls and same store sales (SSS), Banking works on Net Interest Income (NII)/ Net Interest Margin (NIM), Telecom discussions revolve around Average Revenue Per User (ARPU), Hotels focus on average room tariffs and occupancy levels, Currency levels are critical for export oriented IT companies & import oriented oil companies, On-line businesses are dependent on internet penetration and changing habits of people on shopping
Basics of Profit and Loss Account (P/L) - Profit and Loss statement (P/L) statement is a document which contains information on the revenues, costs and profitability of a firm for any given period. Financial results are published each quarter by companies and hence we get quarterly P/L statements as well the final audited P/L statement with the annual report

NISM Series XV : Research Analyst Certification Exam Notes

NISM RESEARCH ANALYST