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5. Valuation
Suitable to the industry, DCF valuation where possible
Relative valuations
6. Sensitivity Analysis
Vulnerability to fluctuations in sales realization and raw material price spurts should be captured to take a call on the risks.
7. Future Triggers That Can Impact Valuations
Large orders
M&A
Fund raising
Commencement of production
Value unlocking through de-merger, etc.
Expectation of Bonus, Stock split, etc.
Strong earnings
New product launches
Due dates of conversion of warrants/FCCBs/other convertible instruments
8. Capital History & Shareholding Pattern
Promoter holding
Outstanding warrants/convertible instruments
Institutional investors
Changes in shareholding & capital structure, both past and likely
9. Investment Argument
Why should the value of the stock go up?
10. What Can Go Wrong?
List all factors that adversely affect the investment outlook
Conclusion
The analyst has to take all factors into consideration and arrive at a probabilistic estimate of the company’s stock price. Analyst will continuously upgrade or down grade his estimates depending on evolving conditions of Economy, Industry and Company plans.
Concluded.
 Prof. Gangineni Dhananjhay holds B.Tech., MBA, NCFM (CFA) qualifications, and is currently Assistant Professor - Finance in the M.B.A. Department at Vivekananda School of P. G. Studies (VSPGS), Hyderabad.
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