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Equity Research and Modelling Training course

posted Sep 19, 2012, 2:06 AM by Biharilal Deora CFA   [ updated Sep 19, 2012, 6:21 AM ]

We are pleased to announce that we have tied up with EduCorporate Bridge for providing Equity Research and Modelling Training course to all Research Challenge Participants.

EduCorporateBridge (www.educorporatebridge.com) is globally recognized training firm, providing blend of instructor-led and online financial training programs in Equity Research, Wealth Management, Technical Analysis Investment banking, Private Equity, Fundamental Analysis, Investment Research, Credit Research, other finance preparatory courses and Campus Placement Trainings etc.

Corporate Bridge Online training Learning Management System provides access to high end financial modeling excel videos, valuation tutorials, online tests, downloadable templates and models that are prepared by Research Analysts & Investment Bankers. 

Equity Research Training Synopsis

The idea of this online access is to provide you with the necessary guideline to make your research challenge presentations a success. Make sure that you do spend a lot of time going through the training library as it contains loads of resources and a similar access is provided to various investment bankers and research houses.

You should apply all the learning in the training library for your financial model. The idea here is to apply all the learning and come up with a recommendation as BUY/SELL.

The key take-away from the training will be as follow – 

1.      Module 1 ::  Excel Usage - Use excel for formatting and draw various Charts and Graphs.

2.      Module 2 ::  Accounting Usage Accounting (primarily identifying the shenanigans and adjusting for non-recurring items)

3.      Module 3 ::  Valuations - Valuations (Discounted Cash Flows as well as Relative Valuations)

4.      Module 4 ::  Financial Modeling - Financial Modeling (to professionally forecast the financials of any company)


Below is the methodology that should be followed -


1. CREATE THE INFRASTRUCTURE :

  • Prepare a blank excel sheet with Separate Income Statement, Balance Sheet and Cash Flows (starting 2007-12) and use neat formats (remember to use comma style etc and also the color coding, refer the first exercise on formatting that we have on  training library!)
  • Populate the historical financial statements (IS, BS, CF) and do the necessary adjustment for Non-recurring items (one time expenses or gains).
  • Do the Ratio Analysis for Historical years (Vertical analysis, horizontal analysis and trend analysisand calculate ROEs using Dupont). 

 

2. FINANCIAL MODELLING :

  • Forecasting of Income Statement (P&L) is most important for analysts. Hence, much of our time should be devoted on this. Please read through the annual report and other documents to get a solid understanding of how the forecast should be done. It is advisable that one should read through other brokerage house research reports to understand how they have modeled sales numbers.
  • Forecast the financial model as discussed in Generic Case Study on our training library. Please use simple assumptions at this stage since this will be your first ever model on any live company. The idea here should be to get the approach correct.
  • Balance the balance Sheet

 

3. VALUATIONS

a. Discounted Cash Flows

    1. Calculate FCFF as discussed in class and the handbook
    2. Apply a suitable WACC post the calculation of the capital structure
    3. Find the Enterprise Value of the Firm
    4. Find Equity Value of the Firm after the deduction of Net Debt
    5. Divide Equity Value of the Firm by the total number of shares to arrive at “Intrinsic Fair Value” of the company.
    6. Do sensitivity analysis of WACC with Share Price

b. Relative Valuations

    • Identify the comparables based on the business, Market Capitalization and other filters
    • Identify the suitable valuation multiple to be used for this business.
    • Suggest “Undervalued” or “Over-valued”.

 

4. Target Price

  • Based on DCF
  • Based on Relative Valuations
  • Recommend whether to “BUY” or “SELL”

 

Overall Time taken to create a model (Approx)

  • Downloading information (brokerage house reports, annual reports, IPO documents, Press Releases)  :: 10 hours
  • Reading through other brokerage reports – 20 hours
  • Reading Annual Reports and creating the infrastructure – 20 hours
  • Financial Modeling (Especially sales modeling) – 30 hours
  • Relative Valuations – 10 hours
  • Target Price – 5 hours


Total Expected Number of hours expected from your-side could be in the range of 95-100 hours.

 

Final Tests : 

There are two final tests (Valuations & Financial Modeling) that you have to take in the next 30 days (Oct 19, 2012). Participants who fail to complete the same in stipulated time period would risk a chance of disqualification from the challenge. 

All the very best for your Written Report and Presentation!

For questions, please email to team@iaipirc.org 

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