For many finance students, equity research and analysis stands as one of the top career choices; maybe second to only investment banking. Equity research is sometimes viewed as the unglamorous, lower-paid cousin of investment banking. The reality, though, differs from this widely held perception. In this post, we will dig in the equity research and analysis career a little deeper.
Equity Research and Analysis Career
by Parinita Gupta
Equity is the value of the property or share of a business. Equity is also called ownership of an asset where a person has the rights to claims against it. Equity represents the values and shares of assets like property, land and building stock and inventory goods etc of the business. It represents the outstanding debts or overhead credits of the company.
Equity research is a way of analyzing the financial performance of the company and forecasting the scenarios of both the buying and selling nature of firm’s assets in the stock market. It is an extensive research method of analyzing a firm’s assets and liabilities which attracts the investors to invest in the company. This is a method of evaluating the share value of the company in the market and provides various insights and reports which are considered by the investors while investing in any firm.
Research analysis is a very important aspect of the company’s development. It is the most appropriate way of analyzing the company current demand and situation in the market. Most of the investors rely on the information provided by the equity researchers before investing anything in the company to analyze whether their investment is safe or not and whether to continue or exit the investment.
Duties and Responsibilities of an Equity Research Analyst
- Equity Research Analyst is responsible for providing the portfolio of the firm and provides the information to the investors.
- Develop financial models, estimates income, revenue, profit, cash flow and returns on the capital.
- Monitor the market data and provide appropriate research reports on a daily basis and update the investors daily
- Assess all kinds of investments in the firm like shares, bonds mutual funds etc and provide insights or the investors and helps in taking crucial investment decisions.
- Forecasts the growths, evaluate competitions and determines the quality of the firm.
- Constructs a comprehensive valuation analysis of the firm.
- Overdrafts the detail information of the company to have relevant information for the investors.
Required Education Qualifications
To become an Equity research analyst one should have a minimum qualification of Bachelor’s degree in finance, economics, or investment analysis. With Bachelor’s degree aspirants can easily get an entry-level job in many financial institutions. But to get hired in the topmost company and also for a good position, an aspirant must have a Master’s degree in Finance Economics and investment analysis, or an MBA.
Certifications: Along with the proper Master’s degree, one should also have certifications from various financial markets to become an equity research analyst in a reputed company or institution.
- Certification from NSE- National stock exchange conducts an online test and certifies the aspirants that they are qualified Analysts of Stock markets. National Institute of Securities Markets (NISM), Mumbai, established by SEBI conducts and approves this certification to the aspirants.
- AMFI MF is also an online test designed by the SEBI to certify the mutual fund brokers and agents. This is a certification course designed for analyzing mutual funds. And aspirants will get certified from Association of Mutual Funds in India (AMFI).
Financial Industry Regulatory Authority (FINRA), issues the licenses for the equity research analysts to analyze and overview firms legal equities.
Chartered Financial Analyst is also a similar position as Equity research analyst who performs various researches of the firms. Chartered Financial Analyst will get certified from CFA Institute. For this designation, an aspirant must have good experience along with qualification as it is mainly for senior positions in the field.
To become a research analyst, certifications in a concerned field issued by SEBI are considered to have a lot of importance. Pursuing the degree in any college affiliated government university or a deemed university is considered if the aspirant possesses a good percentile and accounting skills. Apart from the percentile, colleges or universities like Delhi University, ICFAI, Management Development Institute, Gurgaon, Symbiosis, National Institute of Securities Markets, Mumbai are considered to be the best colleges to become an equity research analyst
Hierarchy of Equity Research Analyst in a firm
- CFA’s are placed as a Senior or Head Equity research analyst.
- Associate Equity Analyst is generally recent master graduates or the candidates who have 2-3 years of experience as an Equity Analyst.
- Junior Analysts are basically the bachelor degree graduates who are basically in the entry level of the industry.
Major Employment Options
- Financial institutions
- Insurance companies
- Pension funds
- Securities firms
- Brokerage firms
- Portfolio management firms
- Venture Capital /Private Equity companies
Top Equity Research Firms
- Motilal Oswal
- Batlivala & Karani Securities India Pvt. Ltd.
- Deutsche Bank
- Standard Chartered Bank
- Credit Suisse
- JP Morgan Equity
- Cornerstone Macro
- Wolfe Research
- BNP Paribas Securities
- CIMB Securities
- Goldman, Sachs & Co.
- Cowen and Co.
- CLSA Asia-Pacific Markets
- Lazard Capital Markets
- BGC Partners
- ABG Sundal Collier
- Amherst Securities Group
- ICICI Securities
- ING Financial Markets
- JB Capital Markets
In India, according to Payscale.com, an Average salary for Research analyst is about 40000 per month with a bonus package of 50-70% of the salary.
A senior research analyst will receive a base salary between $125,000 – $250,000 and the bonus package is 2-5times more than the base salary.
Associate Analyst- Generally an associate analyst will receive about $65,000 – $90,000 per year and50-100% of bonus every year.
Junior Analyst-Generally a junior analyst will receive $45,000 – $50,000 as an average base pay per annum. The bonus package is completely dependent on the performance.