Research Framework • Systematic Approach

Research
Methodology

Our systematic 6-step research process combines quantitative analysis with qualitative insights to identify undervalued mid-cap opportunities in the Indian market.

Our Research Process

We follow a rigorous 6-step methodology that ensures comprehensive analysis of each company. This systematic approach helps us maintain consistency and objectivity across all our research reports.

Step 1: Company Screening

Screening

Initial filtering based on market cap, liquidity, and basic financial metrics

Step 2: Financial Analysis

Financial

Deep dive into financial statements and key performance indicators

Step 3: Business Quality Assessment

Qualitative

Evaluation of competitive advantages and business model strength

Step 4: Industry & Sector Analysis

Industry

Understanding of industry dynamics and growth drivers

Step 5: Valuation Modeling

Valuation

Multiple valuation approaches to determine fair value range

Step 6: Risk Assessment

Risk

Comprehensive evaluation of investment risks and mitigation factors

Company Screening Details

Market cap between ₹500Cr - ₹5000Cr
Minimum daily trading volume of ₹5Cr
Revenue growth >15% CAGR over 3 years
Positive cash flow from operations
Debt-to-equity ratio <1.5
ROE consistently above 12%

Valuation Framework

We employ multiple valuation methodologies to arrive at a comprehensive fair value range, reducing dependence on any single approach and improving accuracy.

Discounted Cash Flow (DCF)

40% Weight

Primary valuation method using projected free cash flows discounted at weighted average cost of capital (WACC)

Key Inputs:

  • Revenue growth projections
  • Operating margin assumptions
  • Capital expenditure requirements
  • Working capital changes
  • Terminal growth rate
  • Discount rate (WACC)
STRENGTHS

Reflects intrinsic business value based on cash generation ability

LIMITATIONS

Sensitive to long-term assumptions and growth projections

Comparable Company Analysis

30% Weight

Relative valuation using trading multiples of similar listed companies in the same sector

Key Inputs:

  • P/E ratios of peer companies
  • EV/EBITDA multiples
  • Price-to-book ratios
  • Revenue multiples
  • Sector-specific metrics
  • Size and growth adjustments
STRENGTHS

Market-based approach reflecting current investor sentiment

LIMITATIONS

May perpetuate market inefficiencies or sector mispricing

Asset-Based Valuation

20% Weight

Valuation based on net asset value and replacement cost of business assets

Key Inputs:

  • Book value of assets
  • Asset revaluation estimates
  • Intangible asset values
  • Working capital
  • Debt obligations
  • Hidden assets/liabilities
STRENGTHS

Provides downside protection and liquidation value

LIMITATIONS

May not capture full value of intangible assets and growth potential

Sum-of-Parts Analysis

10% Weight

Separate valuation of different business segments for diversified companies

Key Inputs:

  • Segment-wise financials
  • Division-specific multiples
  • Standalone business values
  • Synergy benefits
  • Holding company discounts
  • Spin-off potential
STRENGTHS

Identifies hidden value in complex business structures

LIMITATIONS

Requires detailed segment reporting and peer identification

Risk Assessment

Comprehensive risk evaluation across multiple dimensions to provide balanced investment perspective and identify potential downsides.

Business Risks

Key Risk Factors:

  • Competition from larger players or new entrants
  • Customer concentration and key client dependencies
  • Product obsolescence or technology disruption
  • Supply chain disruptions and input cost volatility
  • Dependence on key management personnel
  • Execution risks in expansion or diversification plans

Mitigation Factors:

Strong competitive moats, diversified customer base, innovation capabilities

Financial Risks

Key Risk Factors:

  • High debt levels and interest rate sensitivity
  • Working capital intensive business models
  • Foreign exchange exposure for exporters
  • Seasonal or cyclical cash flow patterns
  • Capital intensive growth requirements
  • Liquidity constraints during market downturns

Mitigation Factors:

Conservative debt levels, hedging strategies, strong cash generation

Market Risks

Key Risk Factors:

  • Economic slowdown affecting demand
  • Interest rate changes impacting valuations
  • Sector rotation and style preferences
  • Market liquidity and trading volumes
  • Global economic and geopolitical events
  • Currency fluctuations for export businesses

Mitigation Factors:

Domestic demand focus, defensive characteristics, quality management

Regulatory Risks

Key Risk Factors:

  • Changes in government policies or regulations
  • Tax law modifications affecting profitability
  • Environmental compliance requirements
  • Labor law changes and minimum wage impacts
  • Import duty and trade policy changes
  • Industry-specific regulatory modifications

Mitigation Factors:

Strong compliance track record, regulatory relationship management

Quality Standards

Independent Research

No conflicts of interest, no investment banking relationships, no paid research

Transparent Methodology

Clear disclosure of assumptions, limitations, and potential biases in every report

Rigorous Process

Standardized research framework with multiple quality checkpoints and peer reviews

Continuous Monitoring

Regular updates on covered companies with quarterly result reviews and model updates

Research Timeline

Initial Screening

1-2 weeks

Quantitative filtering and preliminary assessment

Deep Dive Analysis

3-4 weeks

Comprehensive financial and business analysis

Valuation & Modeling

1-2 weeks

Multiple valuation approaches and scenario analysis

Report Writing

1 week

Synthesis of findings and recommendation formulation

Quality Review

3-5 days

Internal review and fact-checking process

Experience Our Research

See our methodology in action. Browse our latest research reports and discover the depth of analysis we provide.