Investment Notes
Our mission at Netscribes’ Equity Research Investment Notes is to provide our investing clients with alpha-generating analysis of a company's investment potential. We offer a non-consensus examination of financial performance as well as value-creating due diligence on recent events and the company's competitive position.
We believe that investors focused on achieving extraordinary returns should only buy excellent companies when they are undervalued — that is, trading at a discount to their intrinsic value.
Our unbiased research is focused on finding companies that produce consistent, sizable cash flows from core operating activities. By looking beyond the over-relied upon Price-to-Earnings (P/E) ratio and into more advanced ratio analysis, we believe we are able to produce metrics which better gauge the real value of a company and its stock.
Investment Notes provide independent research on emerging companies based out of India and other countries, which can facilitate better understanding and expedite decision making based on the fundamentals of various companies. The note provides insights into a company’s operations, sector outlook, company’s growth prospects and capabilities.
Following is the recommendation scale, which we benchmark against BSE Small-Cap Index for Indian research.
Category A
Over Perform
Category B
Market Perform
Category C
Under Perform
The rating process endorses an evaluation of a company’s qualitative and quantitative parameters. We place the company on a recommendation grid- Netscribes Value Grid, which assesses the financial strength of the company. The performance scores in the Value Grid are calculated on the basis of three years of historical and two years of consensus financial projections. The rating matrix relies on financial statement analysis which encompasses return multiples, leverage and profitability ratios. The matrix measures the company’s performance vis-à-vis its peers. A positive spread of more than 15% from peers is considered to be Strong (A), a negative spread of more than 15% is Weak (C), and a spread varying between -15% and +15% says Neutral (B). Our emphasis is to appraise the inherent strength of the company fundamentals in comparison to the peer group.
Investment Note
Parameters included in an investment note are as follows:
Investment Rationale
This section discusses the value proposition for investors based on the future growth potential of the company.
Company Overview
This provides comprehensive information on the company’s business operations and the revenue model.
Netscribes Ranking Model
This section ranks the company in comparison to its peers on the basis of key industry ratios and performance metrics, both quantitative and qualitative.
Financial Snapshot
Discussion on the quarterly and annual performance of the company and expected growth forecasts.
Netscribes Value Grid
This provides an up to date assessment of the company’s financial health and its sustainability. The value grid scores the company (Strong, Base, and Weak) on the basis of financial statement strength vis-à-vis its competitors.
Industry Outlook
This area provides insights on industry trends, updates, and factors affecting the company’s growth prospects.
Valuation Notes
This section includes relative valuation of the stock based on various multiples like P/E, P/B, EV/EBITDA, etc.
Key Risks
Potential threats and concerns.
