Financial Assets such as stocks need to be systematically valued based on analysis of several factors, that help long-term and short-term investors make sound investment decisions !
Raj Kotecha, our next pathbreaker, works as Equity Researcher at Acuity Knowledge partners, a leading financial research and analytics advisory that assists buy-side clients in valuation of companies for investment.
Raj talks to Shyam Krishnamurthy from The Interview Portal about being introduced to the world of business and financial markets at a young age which led him to a career in equity research.
For students, in the world of finance, your day begins once your classes are over. Learning is by doing !
Raj, can you share your background with our young?
I grew up in the city of Rajkot, Gujarat. As of today, it is well known for its food, auto & auto ancillary industries. To name a few companies, Balaji wafers, Jyoti CNC, Rolex Rings, Gopal Snacks, Atul Auto, Bombay Super Hybrid Seeds, Ganga Forging and Rajoo Engineering are some of the examples that are listed in stock exchanges (Ex-Balaji Wafers.)
As I grew up, my father, a banker, was my first ever inspiration as he has a curious eye for business and financial markets. His perseverance along with my mother’s support, led me to study markets after job hours from the days of my schooling, which made me wonder about how numbers evolve. And that’s where it hit me that this is what I would like to pursue going forward.
What did you do for graduation/post graduation?
I did my BBA (Finance) from HL college of Commerce, Ahmedabad, Ahmedabad University.I also did a PGDM (Finance) from ITM Navi Mumbai. Iam a CFA L1.
What were some of the key influences that led you to such an offbeat, unconventional, and unique career in Equity Research?
Fortunately, I chose commerce after 10th Standard. My Economics teacher introduced me to this beautiful world of money and its influence. At that time, I was not much aware about where I wanted to go, though I was sure that I was not meant for CA or any accounting degree.
Meanwhile, I was also attending various business and economics fairs to learn about the “bigger picture” of how it all connects with the industry and was curated along with the influence of numbers. Though I was into extra-curricular activities, I was never part of the dancing, singing and acting leagues but more into networking, socializing as well as reading community.
At the same time, my elder brother, taught me the importance of personal finance, which was cherry on the top for me. Even today, I am impressed to a large extent that being an engineer, my brother knows more about budgeting than an average consultant.
How did you plan the steps to get into the career you wanted? Tell us about your career path
After my graduation, I took a break of 2 years to study for management entrance exams. Meanwhile, for a year, I worked as an intern at various places.
I worked for Bajaj Finserv, explaining financing policies on consumer goods in SG Highway branch of Chroma, Ahmedabad for 2 months.
After that, I joined ICICI bank, where I was supposed to sell 3 in 1 accounts to customers walking in branches for 2 months.
Both these internship skills honed my communication and presentation skills.
Next, I worked for SNL financial (acquired by S&P Capital IQ recently) and left after 8 months to focus 100% on the management entrance exams.
This internship sharpened my analytical skills and pushed me further to go in-depth for equity research/ IB roles post MBA.
As my 1st year at PGDM was in progress, I got a chance to work in an Equity research internship for 5 months under IDBI Capital.
Then, I worked for Sutherland, which had acquired Adventity in May 2010 as part of their financial research and analytics business. I have worked across the client teams supporting valuation of companies under portfolio along with due diligence of ongoing transactions for global funds solely.
How did you get your first break?
I got my 1st break after my PGDM by interning for free for 5 months.
As my PGDM was in progress, I got a chance to work in an Equity research internship for 5 months under IDBI Capital. However, the catch here was zero stipend. Thinking about the longer-term vs just the money, I opted for the option that was more exciting for a student. I went for the internship. I got good recognition on top of great learnings and was one of the early birds that secured a good job while in placement.
At the time of my internship, there were no such policies of PPO or Full-time offer to work upon graduation. The best part of working at IDBI was, I gained knowledge to such an extent that my 3rd and 4th semesters were already covered while entering the second year of my masters, and that was an edge I earned while covering Indian Media & Entertainment as well as the IT sector.
By the time I was thriving at FIS, I was invited with open arms to join back as a full time as associate equity research analyst over a cup of coffee.
After that, I initiated sharing my own opinions on LinkedIn that attracted like-minded professionals and seniors. I created my own network and that’s how I navigated in the world of equity research opportunities.
What were some of the challenges you faced? How did you address them?
Challenge 1: Academics vs Corporates
Initially, as I entered the market, I realized the gap in academics and corporate life. The gaps are basically the mistakes we do while applying analysis. To overcome this, I started by making notes of everything in terms of how I thought it is in comparison to how it actually is, and how the situation actually evolved in the future.
Challenge 2: High competition
Continuously learning the evolving concepts is the only key to progress.
Challenge 3: Networking
Building a strong network is crucial for career building. To optimize network opportunities, I started sharing my views about industries/ financials/ valuation and overall interlinking of each, and I started inviting industry players with personalized messages on Linkedin to read them and share views. Initially, there was no response, but as the time passed by, I started to see the messages of appreciation about what I shared.
Where do you work now? What problems do you solve?
I am currently affiliated with Acuity Knowledge partners, a leading financial research and analytics advisory in India, assisting a buy-side client in assisting valuation of companies that are picked upon.
In terms of skills, one needs financial modeling, a keen eye for understanding businesses as well as time management to deliver on time, as time is money in finance.
The job is more about practicing, right? There are a number of companies available globally as case studies to analyze. In fact, as prof. Damodaran says, “a company is a collection of projects”. Just pick up a favorite company and apply principles of valuation, but don’t get emotionally attached with your work.
What is a typical day like?
A typical day looks like communicating with the client/seniors to highlight progress of the work, market situation, red flags observed and value derived from the previous day’s work. As the day passes by, it becomes integral to learn about the business model, share price reaction over the years and identify why financials are the way they are. Overall, most of the day is about researching and modeling numbers with thoughts of various scenarios applied in valuation. As a next step, we update the client about the progress and execute updates/changes as required.
How does your work benefit society?
My contribution helps investors in accountability of the investments they are about to make. This encourages financial markets to operate responsibly and maintain competitiveness for all the stakeholders that overall protects the financial community.
Furthermore, promoting financial inclusivity by educating everyone about dynamics and the extent of risk involved promotes financial literacy.
Tell us an example of a specific memorable work you did that is very close to you!
I keep guiding aspiring students to overcome interview nervousness, fear of large numbers, approach towards jobs and creating resumes to get shortlisted without any expectation of returns. And I was able to turn around the lives of over 25 students.
Your advice to students based on your experience?
Your actual day begins when your classes are over. How much you stick to study after sessions and interact with professors is the cherry on top.
Having a backup plan in terms of job preferences can be a great strategy to start with. Filtering out areas not preferred and choosing combination of remaining opportunities is one of the ways to start with, as we may or may not have the power to get into our dream company / role initially.
Once this is figured out, make sure to have at least average or above average package in hand for survival in initial days. Its all about attitude in the long term.
Future Plans?
Continuously learn about evolving concepts of finance and grow a financially responsible society by spreading awareness.