EQUIGRADE

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What is EQUIGRADE?

EQUIGRADE is a flagship product under equity research and grading services offered by CARE. The assessment entails grading of listed companies by CARE on two parameters i.e. fundamentals and valuations. This answers two key questions of the investor –

What EQUIGRADE does not comment on?

What edge does EQUIGRADE provide?

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care@careratings.com

Call Us on +  91 22 6754 3456

Testimonials

Mr. H.C. Shah, CFO, Elecon Engineering Co. Ltd.

“CARE’s team has been extremely responsive and highly professional in resolving any queries we have had on their assessment of our company both during the process of evaluation and after the release of the EQUIGRADE report”

Mr. C. Vasudevan, General Manager, IPF Secretariat, Bombay Stock Exchange Ltd.

“CARE Ratings is one on the empanelled vendors for the project on Research Reports for thinly traded companies by BSE IPF. The entire team at CARE has been extremely professional in their approach towards this project. They were quite courteous in changing the pace of the delivery schedule half way into the project. They were quite serious about meeting deadlines and executing this entire project. Right from the Sales team to their research group, everyone was quite enthusiastic in making this project a grand success for BSE IPF. We wish the entire team of CARE Rating all the very best in all their future endeavors”

Approach & Framework

EQUIGRADE aims to grade a company on two critical aspects i.e. fundamentals & valuations.

Fundamental Grade Framework:

The analytical framework of CARE's fundamental grading methodology is divided into following segments:

INDUSTRY FUNDAMENTALS

COMPANY FUNDAMENTALS

FINANCIAL SOUNDNESS

MANAGEMENT QUALITY & CORPORATE GOVERNANCE

Valuation Grade:

Process Flow

How does EQUIGRADE assessment work?

FAQs

What is EQUIGRADE?

EQUIGRADE is an independent equity research carried out by CARE. The assessment entails grading of listed companies by CARE on two key parameters i.e. fundamentals and valuations. This answers two key questions –

What do the two Grades mean?

The fundamental grade is assigned based on CARE assessment of the company with respect to its business, financial position, management, industry outlook & corporate governance. The valuation grade on the other hand, entails calculation of current intrinsic value (CIV) of the equity shares of the company by CARE using the most appropriate valuation techniques. This CIV would then be compared with the prevailing market price to arrive at a valuation grade. Both fundamental and valuation grade are on a scale of 1 (one) to 5 (five); one being the lowest grade and five being the highest grade.

What is the validity period for the CIV?

CIV would normally be valid for a period of one year from the initiation; however the same is reviewed every quarter. CIV could change if there is a need to change our estimates of the company’s future financials, cost of capital or beta (risk factor).

What is the possibility of a Grade (Fundamental and Valuation) change during the reviews?

Of the two grades, fundamental grade is relatively more stable since it is based on company’s internal factors, while valuation grade which is dependent on market factors is more prone to change.

While, CARE reserves the right to review the fundamental grade during the year and it may undergo a change in case of any significant event that affects the business, industry and/or financial prospects of the company; generally the fundamental grade is maintained through the one year period of the assessment. Valuation grade on other hand may change in every review, since it is dependent on the market price as on the date of release of the update report.

What is the frequency of EQUIGRADE update reports?

CARE would provide coverage on the company for an entire period of one year (from the date of the release of the initiation report), which would include an initiation report and at least three quarterly results update reports. However, in case of any significant event, CARE can issue an additional update report in the intermittent period.

How does a company get itself graded by CARE?

The company can visit CARE’s website - www.careratings.com and visit the section on EQUIGRADE. This section explains the various aspects of EQUIGRADE, apart from the contact details. For the commencement of the grading exercise, the company needs to sign the mandate with CARE, and submit the required fees.

How is the EQUIGRADE report an unbiased assessment, since the company mandates the report?

CARE does not conduct any trading activity nor does it have any investment banking or advisory relationship with the client. Also, CARE follows a flat fee structure (within a band) which is paid up-front, and no compensation is dependent on the grading assigned.

What is the information required by CARE to undertake the EQUIGRADE assessment?

Standard information requirement for EQUIGRADE assessment includes annual reports for the last 3 years, 5 year consolidated financial projections and information/projection for key business segments/projects of the company.

What is the general procedure followed by CARE once we give the mandate for undertaking the EQUIGRADE assessment?

Post the receipt of the mandate and standard information, CARE’s team would undertake a plant/site visit and a meeting/ interaction with the management for a thorough understanding of its business. The team would then analyze the information obtained and prepare a research report of its assessment and arrive at a CIV for the company’s equity shares. Some more information, on case to case basis may also be requested by the team during the analysis. The assessment is then deliberated upon by CARE’s grading committee, who validates the CIV and assigns the grading to the company. A provisional communication is then sent to the company informing the CIV and grading assigned by the committee along with a draft research report for acceptance. Post acceptance from the company, CARE would widely disseminate the research report and also issue a press release to that effect.

How much time does it take for the entire assignment?

It generally takes around a week to ten days time to get the complete information from a company. Around a week is spent in scheduling and undertaking the plant/site visit and management interaction. It takes approximately three weeks at our end for the analysis, assigning of the grading and preparation of the research report.

Hence, the overall assignment, including receipt of information, analyses of the information, plant/site visit, management meeting, assigning of the grading and presenting of the research report to the company for its acceptance would take a total of around five to six weeks, approximately.

What if the grading assigned to the company is not acceptable?

CARE will not release or publish the report if the company does not accept either the fundamental grade or the CIV assigned to it by CARE. Confidentiality of all information provided by the company to undertake the EQUIGRADE assignment would be maintained and no information would be shared with any person(s)/institution except, if required by law.

Where are the EQUIGRADE reports disseminated?

EQUIGRADE analysis is presented in a report format and widely disseminated from our end through various channels viz. e-mailers, press, websites etc. targeting institutional investors and shareholders of listed companies. The reports are also made available on the websites of leading financial newspaper & the analysis is printed in the investor related financial newspaper on a regular basis. CARE has tied up with various widely used information service providers such as Dow Jones Factiva, Thomson Reuters, ISI Emerging Markets (Securities.com), ET Intelligence, Moneycontrol.com, Research Bytes, etc. to host the reports on their websites. The reports are also uploaded on CARE’s website & can be uploaded by the company mandating for such exercise on their website.

We are already undertaking a PR activity and have appointed a PR agency for the same. Why should we still go for an EQUIGRADE assessment?

EQUIGRADE supplements a PR activity. An assessment of the fundamentals of company and the valuation of its equity shares by CARE (an independent agency regulated by SEBI) helps in enhancing the company’s credibility. While most companies do undertake some or the other investor information related /PR activity, a research and grading of a company’s equity by CARE brings the edge of independence that investors’ look for, thereby furthering the investor friendly image of the company. Further the dissemination of EQUIGRADE reports by CARE helps improve visibility for the company, which in turn also improves the liquidity for its equity shares in the market.

How will a small market capitalization company like ours benefit from EQUIGRADE?

Investor interest in small capitalization companies is generally lower; they are also not actively tracked by brokerages, which lead to small capitalization companies generally trading at a price lower than the fundamentals of the company merit. EQUIGRADE is especially beneficial for a small market capitalization company as it helps the company showcase the fundamental soundness of its business and thereby aligns the market price to the intrinsic value of its equity shares. EQUIGRADE can also be a useful tool in discovery of hidden gems in the stock market.

How does EQUIGRADE benefit a company of large size, which is well covered by brokerages?

Grading is provided only by select SEBI approved agencies like CARE. A grading helps company benchmark itself against the entire universe of listed companies in India. As against a brokerage house which only recommends a target price through its research reports and which can be biased on account of advisory or investment banking relationship with the company, EQUIGRADE is an unbiased assessment of the company’s fundamentals and valuation of its equity shares. EQUIGRADE provides an edge of independence that investors look for in equity research and that gives a significant boost to the company’s image of being a transparent and investor friendly company.

Our company is not planning for any type of fund raising, how does EQUIGRADE benefit our company?

The company may not want to raise any funds on the immediate basis; however EQUIGRADE assessment prepares the company to undertake a fund raising activity in future, by aligning its market price to the intrinsic value of its equity shares. An unbiased research report, which is widely, disseminated helps the company project an investor friendly and transparent image and thereby assists in the overall brand building for the company. The assessment also aids the top management of a company in making strategic internal and business decisions and can also be used as a third party viewpoint, while sharing information with strategic partners and stakeholders.

Will CARE participate in road shows and investor meets conducted by the company?

CARE will participate as an independent agency in road shows and investor meets conducted by the company to present its analysis. Any additional cost incurred by CARE on actual basis for the same would have to be borne by the company.

Our company is still not generating operating revenues. Will CARE be able to undertake the EQUIGRADE assessment for us?

CARE’s framework used for grading companies is extremely elaborate and considers both current as well as the future prospects of a company. For a company which is yet to generate any operating revenue CARE would consider the inputs, processes and systems of the project being undertaken, the brand and resources in place, the vision, experience and expertise of the team to evaluate the risks and prospects of the company to generate operational revenues in future to assign a grade. Valuation accordingly is arrived at either by using the asset based valuation model or by calculating the present value of the future cash flows, in case where project is expected to commence in near future. Intangible such as brand is also given a notional value in such cases.

Contact the Analyst

Do you wish to get alerts of new EQUIGRADE releases*



care@careratings.com

Call Us on +  91 22 6754 3456

Testimonials

Mr. H.C. Shah, CFO, Elecon Engineering Co. Ltd.

“CARE’s team has been extremely responsive and highly professional in resolving any queries we have had on their assessment of our company both during the process of evaluation and after the release of the EQUIGRADE report”

Mr. C. Vasudevan, General Manager, IPF Secretariat, Bombay Stock Exchange Ltd.

"CARE Ratings is one on the empanelled vendors for the project on Research Reports for thinly traded companies by BSE IPF. The entire team at CARE has been extremely professional in their approach towards this project. They were quite courteous in changing the pace of the delivery schedule half way into the project. They were quite serious about meeting deadlines and executing this entire project. Right from the Sales team to their research group, everyone was quite enthusiastic in making this project a grand success for BSE IPF. We wish the entire team of CARE Rating all the very best in all their future endeavors"

Dissemination Snapshots

Contact the Analyst

Do you wish to get alerts of new EQUIGRADE releases*



care@careratings.com

Call Us on +  91 22 6754 3456

Testimonials

Mr. H.C. Shah, CFO, Elecon Engineering Co. Ltd.

“CARE’s team has been extremely responsive and highly professional in resolving any queries we have had on their assessment of our company both during the process of evaluation and after the release of the EQUIGRADE report”

Mr. C. Vasudevan, General Manager, IPF Secretariat, Bombay Stock Exchange Ltd.

"CARE Ratings is one on the empanelled vendors for the project on Research Reports for thinly traded companies by BSE IPF. The entire team at CARE has been extremely professional in their approach towards this project. They were quite courteous in changing the pace of the delivery schedule half way into the project. They were quite serious about meeting deadlines and executing this entire project. Right from the Sales team to their research group, everyone was quite enthusiastic in making this project a grand success for BSE IPF. We wish the entire team of CARE Rating all the very best in all their future endeavors"

Reports and Updates
Company Master Report Month/Year Update
1 2 3 4
Press Release
Company Master Report Month/Year Update
1 2 3 4

Contact the Analyst

Do you wish to get alerts of new EQUIGRADE releases*



care@careratings.com

Call Us on +  91 22 6754 3456

Testimonials

Mr. H.C. Shah, CFO, Elecon Engineering Co. Ltd.

“CARE’s team has been extremely responsive and highly professional in resolving any queries we have had on their assessment of our company both during the process of evaluation and after the release of the EQUIGRADE report”

Mr. C. Vasudevan, General Manager, IPF Secretariat, Bombay Stock Exchange Ltd.

"CARE Ratings is one on the empanelled vendors for the project on Research Reports for thinly traded companies by BSE IPF. The entire team at CARE has been extremely professional in their approach towards this project. They were quite courteous in changing the pace of the delivery schedule half way into the project. They were quite serious about meeting deadlines and executing this entire project. Right from the Sales team to their research group, everyone was quite enthusiastic in making this project a grand success for BSE IPF. We wish the entire team of CARE Rating all the very best in all their future endeavors"

Contact the Analyst

Do you wish to get alerts of new EQUIGRADE releases*



care@careratings.com

Call Us on +  91 22 6754 3456

Testimonials

Mr. H.C. Shah, CFO, Elecon Engineering Co. Ltd.

“CARE’s team has been extremely responsive and highly professional in resolving any queries we have had on their assessment of our company both during the process of evaluation and after the release of the EQUIGRADE report”

Mr. C. Vasudevan, General Manager, IPF Secretariat, Bombay Stock Exchange Ltd.

"CARE Ratings is one on the empanelled vendors for the project on Research Reports for thinly traded companies by BSE IPF. The entire team at CARE has been extremely professional in their approach towards this project. They were quite courteous in changing the pace of the delivery schedule half way into the project. They were quite serious about meeting deadlines and executing this entire project. Right from the Sales team to their research group, everyone was quite enthusiastic in making this project a grand success for BSE IPF. We wish the entire team of CARE Rating all the very best in all their future endeavors"

Our other offerings within this space include:

CARE provides third-party independent business research & equity valuation assessment for private/ unlisted companies. The research & assessment is useful in arriving at fair valuation when a company is raising funds through the equity route or during strategic stake sales, mergers or acquisitions. The assessment can be either mandated by the company or the investor. The output is typically provided in a report format. CARE’s team can also be called upon to present the analysis & valuation as an independent party.

These are assignments typically done on behalf of a venture capital, private equity or a strategic investor as a primary screening of the investment proposal. This saves time and cost for the investor, since the investor is able to screen multiple investment proposals simultaneously & thereby is able to make correct investment decision. Depth, focus & parameters can be customized based on the investor’s requirements.

These are equity based research reports on listed companies without any grading. The reports can either be based on current financials or could be forward looking entailing future projections and valuations. The reports can either be white labeled, which can be branded by the client under his brand or can be disseminated under CARE’s brand.

Equity market newsletters prepared by CARE’s team typically includes review of global & Indian economic indicators, corporate and sectoral news round-up, equity market indicators (both primary and secondary markets). These newsletters can either be branded by the client under his brand or be disseminated under CARE’s brand.

Contact the Analyst

Do you wish to get alerts of new EQUIGRADE releases*



care@careratings.com

Call Us on +  91 22 6754 3456

Testimonials

Mr. H.C. Shah, CFO, Elecon Engineering Co. Ltd.

“CARE’s team has been extremely responsive and highly professional in resolving any queries we have had on their assessment of our company both during the process of evaluation and after the release of the EQUIGRADE report”

Mr. C. Vasudevan, General Manager, IPF Secretariat, Bombay Stock Exchange Ltd.

"CARE Ratings is one on the empanelled vendors for the project on Research Reports for thinly traded companies by BSE IPF. The entire team at CARE has been extremely professional in their approach towards this project. They were quite courteous in changing the pace of the delivery schedule half way into the project. They were quite serious about meeting deadlines and executing this entire project. Right from the Sales team to their research group, everyone was quite enthusiastic in making this project a grand success for BSE IPF. We wish the entire team of CARE Rating all the very best in all their future endeavors"

Contact the Analyst

Do you wish to get alerts of new EQUIGRADE releases*



care@careratings.com

Call Us on +  91 22 6754 3456

Testimonials

Mr. H.C. Shah, CFO, Elecon Engineering Co. Ltd.

“CARE’s team has been extremely responsive and highly professional in resolving any queries we have had on their assessment of our company both during the process of evaluation and after the release of the EQUIGRADE report”

Mr. C. Vasudevan, General Manager, IPF Secretariat, Bombay Stock Exchange Ltd.

"CARE Ratings is one on the empanelled vendors for the project on Research Reports for thinly traded companies by BSE IPF. The entire team at CARE has been extremely professional in their approach towards this project. They were quite courteous in changing the pace of the delivery schedule half way into the project. They were quite serious about meeting deadlines and executing this entire project. Right from the Sales team to their research group, everyone was quite enthusiastic in making this project a grand success for BSE IPF. We wish the entire team of CARE Rating all the very best in all their future endeavors"