Research and Business don’t seem connected. We always associate Science with Research and MBA with Business . But research is actually a methodical and thorough analysis of any subject. And if that methodical and thorough analysis is done on a company or business?
Archit Joshi, our next pathbreaker and Archer, is an Equity Research Analyst, blending his business knowledge with thorough and methodical analysis of companies, thus helping institutional investors pick high potential stocks. Lets learn more about his work…
Shyam Krishnamurthy from The Interview Portal talks to Archit about his transition from Engineering to Capital Markets.
Archit, can you tell us a bit about yourself?
I am an Engineer from Mumbai University and have done my MBA in Finance. I work as an equity analyst with a leading institutional brokering house – Dolat Capital. I had developed an interest in Archery at the age of 18 and have practiced for 7 years. I was lucky enough to have participated in State, National and International competitions. Besides, I play Tabla and enjoy swimming. Now being a stock market professional, I enjoy research, valuations and politics. I have been blessed with supportive parents and some people who played an instrumental role in shaping my career. I choose to believe that gratitude reciprocates and will continue to help the needy.
What did you study?
I did my B.E in Instrumentaton Engineering followed by an MBA (Finance) from Welingkar Institute of Management.
Can you tell us how you got into an offbeat, unconventional and unusual career such as Equity Research after doing your Engineering?
While engineering tests your analytical, mathematical and practical knowledge, i did not feel enthusiastic about pursuing a career as an engineering professional. I also did not want to leave the country to pursue masters. I thus decided to opt for a MBA program. Again I had not decided on choosing Marketing or Finance in the first year of MBA, as time progressed my inclination towards stock markets and research increased and thus it helped me in making the right choice. To put it in a nutshell, I have always thought of experiencing something practically and not having pre-conceived notions. I had thus kept all the options open and only decided to take up Finance as a major when I knew I could do justice to my decision
As an MBA student who chose finance, I used to interact with my cousin and my uncle who passionately spoke about how stock markets work which sparked an interest in capital markets. I developed interest in reading at a later stage in my academic life, which made me realise how little my knowledge was within this huge canvas of knowledge. Some of the professors in my college too shaped my thoughts. I would specially like to thank a senior fund manager working for a large asset management company, who helped me in providing an entry into stock markets .
I read various books, blogs, articles related to investments. I took up the CFA program which helped me brush up my basics.
Can you explain Equity Research?
In short, Equity research is a process of evaluating companies using income statements, balance sheets and cash-flow statements. Equity analysts provide recommendations on companies as prospective investment opportunities by understanding their business models and performing in-depth financial analysis.
There are various types of techniques involved in analysing a stock. Two broader techniques are Fundamental analysis and Technical analysis. Fundamental analysts use the published financial statements (like income statement and balance sheets) and publicly available data to evaluate and value the companies. Technical analysts use statistical trends gathered from trading activity, such as price movement and volume. I am a fundamental research analyst.
Technical analysts usually give out short term (may last for a day or for a month at best) trading ideas/recommendations to investors looking at different charts, patterns and statistics available. While fundamental analysts try to value a company using their projections of growth and understanding the financial health of a company and provide long term recommendations (3-5 years, or even more).
As a part of the stock markets, there are two broader participants -1) an asset management company (mutual fund, insurance, hedge fund) 2) a broker.
An asset management company (also referred to as the buy side) has large sums of money that they raise from investors (just like you and I) and work towards identifying investment options which can give them a higher return. The asset management company takes a part of the invested money or the return as their own asset management fee and then passes on the returns they have made to the investors.
A stock broker (also referred to as the sell side) acts as an intermediary between the asset management company and the exchange (where the companies are listed in stock markets) and executes trading (buying or selling) for the asset management company. A broker also may have a team of technical and fundamental analysts who can perform their own independent research to provide buy/sell recommendations to its clients (using their own style/technique).
What was your career path after MBA in Finance?
Entering as a fresher in the capital markets is a huge entry barrier. There are qualified Chartered accountants and CFA’s who more often than not get rejected in interviews with broking firms. I was fortunate enough to be helped by a senior fund manager with a large asset management company. He helped me enter the field of capital markets while I was working with Infosys in Pune as a functional consultant. I started my career with one of the oldest broking firms in India – Batlivala and Karani securities. I was again quite lucky to have worked under one of the best Chemicals & Paints analyst, it was a great learning curve and cherish my time with B&K securities. I had a brief stint of 8 months with Infosys and now feel privileged to be an equity analyst.
As a junior analyst I got accustomed to the processes, tools, techniques involved in performing equity research. The KRA (Key Responsibility Area) of a junior analyst is to typically assist the lead analyst in financial modelling, writing reports and setting up meetings with the senior managements of listed companies. The lead analyst is responsible for providing buy/sell recommendations based on our research to analysts and fund managers (also called as buy-side analysts as they are responsible for handling billions of rupees in mutual fund or insurance schemes). I voluntarily took up performing extensive primary research, which accelerated my understanding of different companies by reading in my free time. I worked for 10-14 hours a day and had to sacrifice the ‘work-life balance’. I was hired by HDFC Securities as lead analyst in Dec-17, a year after which I joined Dolat capital in Feb-19. Now I am actively covering and recommending companies under the Chemicals and Agro-chemicals sector and author equity research reports which are prepared for our institutional clients.
Primary research broadly is getting insights and ideas from the grass root level (speaking to farmers, technicians, consumers, industry experts etc) While secondary research is using the internet, books, magazines, blogs etc to extract information.
What were some of the challenges you faced in achieving your career goals?
Not having an accounting background in the field of finance could be challenging. In my spare time, I read up accounting norms and cleared my doubts from a lot of my friends who were Chartered accountants
I took up a much challenging role as an independent analyst (I worked as an associate to an independent analyst as I started my career) early during my career with only 18 months of experience. Interacting with experienced and senior investment professionals and pitching stock ideas with very little experience of my own was a big challenge. I resorted to long working hours with pure focus on primary research and reading. Reading and interacting with people helped me broaden my thoughts and was able to service my clients better.
Tell us what you do currently?
I work with a leading brokering firm – Dolat capital as an equity research analyst. I study, research, prepare financial models and use valuation techniques to find investment propositions for my clients (fund managers of mutual funds, insurance companies). I love the dynamic nature of this job, I love interacting with people and meeting and collecting insights from the senior management of various companies (CEO’s/MD’s/CFO’s).
What is a day in your work like?
I fortunately do not have a typical day at work, I get to travel often for research and my interactions with farmers/dealers/traders/government officials have been phenomenal. Much more than skills (which is essentially being fluent with Microsoft office) one requires passion for economics, stock markets and ideas to be able to do justice to their time.
How does your work benefit the society?
I often stumble upon a popular conundrum, ‘how is the market looking?’, ‘do you have any stock tips?’. I usually share my views about the economy and try to shun the conversation without sharing any ‘tips’(which is unethical given the profession I am in). However, I do not shy upon any help one may require in planning investments, saving taxes, suggesting investment avenues etc. I also have a knack for teaching and I do not refrain from imparting any finance related knowledge to the stock market aspirants.
Tell us an example of a specific work you did that is very close to you!
I got a chance to represent India for an Archery tournament in Thailand in 2013. Wearing a specially designed Indian jersey and playing for the country is a special feeling.
Your advice to students based on your experience?
Do not shy away from trying different things, I firmly believe that one eventually finds the things that they love doing. There are no specific age milestones for achievements, hence do not get bogged down with peer pressure. Try to peruse everything with an entrepreneurial attitude.
There are goals and intermediate goals. In the mid-term I would like to be a part of an asset management company and learn more about fund management. I dream of starting something of my own (needless to say – a business) in the long run.