Fin Maverick
Foundations VocabularyAccounting & ReportingEconomics & MacroQuant Methods & ProgrammingBusiness & Company AnalysisCorporate Finance & ValuationBehavioural Finance
Banking & Market InfrastructureFixed Income & RatesDerivatives & Structured ProductsPublic EquitiesTransactions & DealsPortfolio ConstructionFunds & AMCs
Private Markets & AlternativesRisk, Treasury & ControlAI & Digital FinanceStochastic Calculus & PricingWealth & Personal FinanceIndian Markets & RegulationProfessional Practice
CalculatorComparison
Frameworks
Explore Bootcamps
Equity ResearchPortfolio ManagementMutual Fund MasteryFinancial LiteracyInvestment Banking Analyst
Private Equity AnalystHedge Funds AnalystBreaking Into VCBreaking Into QuantsAI For Finance
Financial Analyst ProgramRisk Management ProgramPrivate Wealth ManagementDebt Capital MarketsDerivatives Foundation
Explore Internships
Equity Research InternMutual Fund Intern
Portfolio Management InternFinancial Literacy Intern
Explore Micro Courses

Equity Research6

Writing an Investment ThesisBuilding a Discounted Cash FlowReading an Annual Report FastReading a Sector Before a CompanySpotting Quality of Earnings Red FlagsBuilding a Revenue Forecast From Drivers

Portfolio Management3

Rebalancing: When, Why and What It CostsStrategic and Tactical Asset AllocationMeasuring Risk in a Portfolio

Mutual Fund Mastery3

Comparing Funds Without Being FooledHow a NAV Is Struck and Which Day You GetReading a Fund Factsheet Properly

Derivatives Unlocked4

Hedging a Real ExposureThe Greeks, PracticallyFutures, the Basis and What Moves ItReading an Option Payoff

AI For Finance2

Retrieval and Grounding for FinanceDocument Extraction in Finance

Breaking Into Quants4

Backtesting a StrategyHypothesis TestingCleaning Financial DataRegression for Finance

Breaking Into VC3

Sizing a MarketReading a Term Sheet as a FounderHow a Venture Round Actually Works

Financial Analyst Program4

Common Size and Trend AnalysisReading a Cash Flow StatementRatio Analysis That Says SomethingBuilding a Working Capital Schedule

Risk Management Program2

Credit Exposure and How It Is ReducedValue at Risk and What It Hides

Investment Banking Analyst3

Precedent Transactions and Why They DifferReading a Term Sheet StructurallyBuilding a Comparable Companies Table

Private Wealth Management3

Tax Aware Portfolio DecisionsBuilding a Client Risk ProfileGoal Based Planning Arithmetic

Debt Capital Markets3

Analysing an Issuer's CreditDuration and What It Does Not Tell YouBond Pricing and Yield Mechanics

Private Equity Analyst2

Fund Waterfalls and CarryThe LBO in Structure

Hedge Funds Analyst2

Short Selling MechanicsLong Short Mechanics
Courses
Explore Career Roadmaps
Investment Banking AnalystEquity Research AnalystVC AnalystPrivate Equity AnalystHedge Funds Analyst
Quant AnalystAI For FinanceFinancial Analyst ProgramPrivate Wealth ManagementDebt Capital Markets
Risk Management ProgramDerivatives FoundationPortfolio ManagementMutual Fund Mastery
PartnershipsShowdown
Log inSign up
Equity Research Analyst · CoreTrack
1Financial Accounting, Reporting & Analysis
iAccounting System and Standards
Financial AccountingDebits and CreditsAccrual and Cash AccountingAccounting Policies, Estimates and…The Matching PrincipleDouble-Entry AccountingGoing ConcernInd AS and IFRSWhy Two Honest Companies…
iiFinancial Statement Architecture
The Three Financial StatementsConsolidated Financial StatementsStandalone and Consolidated Statements…How to Read a…How to Perform Trend…Which Accounting Rules Apply…
iiiIncome Statement, Profitability and Tax
The Income StatementRevenue vs Income vs ProfitHow to Read an Income StatementThe Profit LadderEBITDA and EBIT Compared,…EBIT vs EBT vs PATOperating ExpenditureTax-Loss CarryforwardWhy a Company's Effective…Deferred TaxDiluted EPSEffective Tax Rate
ivBalance Sheet and Capital Employed
The Balance SheetAsset TypesCapital EmployedReturn on Capital EmployedLiabilitiesBook ValueRetained EarningsOff-Balance-Sheet FinancingHow to Read a Balance SheetTangible Net Worth
vCash Flow and Liquidity
The Cash Flow StatementOperating, Investing and Financing…Operating Cash FlowProfit vs Cash FlowCash Flow From Operations vs EBITDARevenue Growth vs Operating Cash FlowHow to Read a Cash Flow StatementHow to Reconcile Cash…
viRevenue, Receivables and Working Capital
The Working Capital CycleThe Working Capital CycleReturn on Invested CapitalHow Working Capital Affects Cash FlowAccrued and Deferred RevenueRevenueHow to Analyse Revenue QualityAccounts PayableAccounts ReceivableExpected Credit Loss
viiInventory, Cost Accounting and Margins
Cost AbsorptionInventoryCost of Goods SoldFIFO vs Weighted Average CostAmortised Cost vs Fair ValueInventory Write-DownsMargin AnalysisContribution MarginOperating LeverageGross Profit vs Gross MarginHow to Analyse Profit MarginsHow to Interpret Operating…
viiiFixed Assets, Leases and Intangibles
DepreciationDepreciation MethodsAmortisation vs DepreciationAsset ImpairmentCapital ExpenditureAsset Efficiency and Capital IntensityProperty, Plant and EquipmentIntangible AssetsOperating Lease vs Finance…How to Analyse Capex…Why Capitalising Costs Increases…
ixDebt, Equity and Financial Instruments
Equity on the Balance SheetDebt TypesNet Debt and LeverageDebt vs Equity Accounting ClassificationHow to Analyse Debt…Convertible BondsInterest in the AccountsShare CapitalShare DilutionHybrid Instruments
xConsolidation and Business Combinations
ControlSubsidiaryGoodwillAssociate CompanyJoint Venture vs Associate…Intercompany EliminationsThe Equity MethodHow to Analyse Group…
xiCash, Investments and Financial Assets
Cash and Cash EquivalentsHow to Analyse Cash…The Fair Value HierarchyHow to Interpret a…Financial Asset ClassificationMarketable Securities and Short-Term Investments
xiiFinancial Ratios and Performance Diagnostics
Return on CapitalDuPont AnalysisHow to Perform Common-Size AnalysisDebt to EquityLiquidity RatiosLeverage and Coverage RatiosReturn on Equity and the DuPont DecompositionWhich Financial Ratios Matter…
xiiiEarnings Quality, Red Flags and Forensics
Earnings QualityHow to Prepare for…Channel StuffingEarnings ManagementHow to Analyse Related-Party…How to Spot Accounting…Why Frequent Exceptional Items…What an Auditor Change…
xivAnnual Reports, Notes and Disclosure Reading
Notes to the AccountsManagement Discussion and AnalysisSegment ReportingShareholding PatternPro Forma FinancialsAnnual Report vs Investor…How to Read an Annual Report
xvAudit, Assurance and Reporting Reliability
The Statutory Audit and the AuditorAudit MaterialityEmphasis of MatterFinancial RestatementInternal AuditLimited ReviewKey Audit MattersInternal Controls Over Financial ReportingThe Audit OpinionAuditor Independence
2Business, Industry & Company Analysis
iBusiness Fundamentals and Models
The Business EcosystemThe Business ModelStakeholdersThe Business Life CyclePlatform BusinessesHow to Build a…The Value NetworkMonetisationUnit EconomicsThe Profit PoolTake RateB2B vs B2C
iiRevenue and Pricing
The Revenue ModelRevenue Growth vs Monetisation…Pricing PowerRecurring RevenueAverage Revenue Per UserARPU vs Average Order ValuePrice DiscriminationGross Margin vs Contribution MarginFixed Costs vs Variable Costs
iiiOperating Model and Supply Chain
The Operating ModelThe Value ChainThroughputThe Supply ChainVertical IntegrationVertical vs Horizontal IntegrationProcurementCapacity UtilisationJust-in-Time vs Just-in-Case InventoryMake vs Buy
ivCustomers and Brands
Brand EquityCustomer LoyaltyCustomer Segments and the JourneyCustomer EconomicsHow to Analyse Customer…Distribution ChannelsCustomer Acquisition Cost
vCompetitive Advantage and Moats
The Sources of Competitive…Competitive RivalryEconomies of Scale and…Network EffectsSwitching CostsCost Leadership vs DifferentiationHow to Test Whether a Moat Is Eroding
viIndustry Structure and Sector Behaviour
Industry TypesConsolidation and FragmentationSubstitutesBuyer PowerSupplier PowerThe Industry Life CycleHerfindahl-Hirschman IndexSector vs IndustryCompany Analysis vs Industry AnalysisCyclical vs Defensive SectorHow to Apply Porter's…How to Analyse Competitive…
viiMarket Size and Addressable Market
Market SizeMarket Concentration vs Market ShareTop-Down vs Bottom-Up Market SizingDemand DriversThe Adoption CurveGrowth DriversMarket FragmentationMarket ShareHow to Interpret Market Share Changes
viiiInnovation and Technology Shift
InnovationResearch and DevelopmentTechnology Adoption and DiffusionThe Product Life CycleProduct Innovation vs Process InnovationDigital TransformationCannibalisationDisruptive InnovationThe Technology S-Curve
ixCorporate and Business Strategy
Corporate and Business Strategy ComparedHow to Build Business…How Execution Risk Can…Organic and Inorganic Growth ComparedGrowth Investment vs Capital ReturnOrganisation Design and TransformationHorizontal vs Conglomerate DiversificationCentralised vs Decentralised OrganisationCompany Research vs Investment ResearchHow to Separate Facts,…
xManagement and Governance Quality
Management QualityFounder-Led vs Professional ManagementThe PromoterThe BoardInstitutional OwnershipPromoter Ownership vs Institutional…The Agency ProblemIndependent DirectorsInsider OwnershipHow to Analyse Ownership…How Capital Allocation Shapes…
xiStrategic and Business Risk
Business RiskPlatform vs Pipeline BusinessAsset-Light vs Asset-Heavy vs…Commodity vs Branded BusinessHow to Write a…The Business Risk RegisterStrategy in PracticeStrategic Risk vs Financial RiskHow to Evaluate a…How to Build a…
xiiBusiness Research Method
Business AnalysisCompany Filings as a Research SourceCompetitor MappingThe Variant ViewPrimary ResearchPrimary vs Secondary Research
3Corporate Finance & Valuation
iCorporate Finance Fundamentals
Corporate FinanceCorporate Finance vs AccountingAgency CostsThe Financial ObjectiveThe Financing DecisionThe Investment DecisionProfit Maximisation vs Value…How Capital Allocation Affects…
iiTime Value of Money
Time Value of MoneyTime Value of MoneyCompoundingNominal and Effective Annual RatesThe Discount RateNominal vs Real Discount RateAnnuity vs Perpetuity
iiiCash Flow and Value Drivers
ReinvestmentReinvestment RateRevenue GrowthRevenue Growth vs ReinvestmentReturns in Corporate FinanceValue DriversOperating MarginEconomic ProfitFCFF vs FCFEHow to Normalise Earnings…
ivCost of Capital
The Cost of CapitalCost of CapitalSunk Cost vs Opportunity CostHow to Estimate a…Levered and Unlevered BetaCountry Risk PremiumEquity Risk PremiumThe Risk-Free Rate
vCapital Structure
Capital StructureHow to Analyse a…Financial LeverageOperating Leverage vs Financial…RecapitalisationDebt FinancingDebt CapacityGross Debt vs Net DebtEquity FinancingHow Leverage Can Increase…Refinancing RiskFinancial Distress
viCapital Budgeting
Capital BudgetingSunk CostsDiscounted PaybackPayback vs Discounted PaybackNet Present ValueInternal Rate of ReturnProject AppraisalIndependent vs Mutually Exclusive…How to Resolve NPV and IRR Conflicts
viiWorking Capital Finance
Capital RationingWorking Capital FinancingExcess CashCash ManagementShort-Term Financing
viiiPayout Policy
Payout PolicyPayout and Return of CapitalDividendsDividend Yield vs Payout RatioSignallingShare BuybacksDividend vs Buyback
ixValuation Fundamentals
ValuationValuation RangeFCFF vs FCFE ValuationSOTP vs Consolidated ValuationHow to Build a DCF ValuationHow to Build a…How to Build a…Firm Value and Equity ValueReplacement CostShareholder ValueEnterprise-to-Equity Value BridgeSum-of-the-PartsEnterprise Value vs Equity ValueValue vs PriceAsset Value vs Earnings ValueBook Value vs Adjusted Book ValueLiquidation Value vs Going-Concern…
xDiscounted Cash Flow
Discounted Cash FlowTerminal ValueNormalisationThe Forecast HorizonIncremental Cash FlowFree Cash Flow to FirmDiscounted Cash FlowBase Case vs Bull Case vs Bear CaseTwo-Stage vs Three-Stage DCFForward vs Historical FinancialsOperating vs Non-Operating AssetHow to Forecast Free Cash FlowHow to Audit a DCF Model
xiRelative Valuation
Relative ValuationDCF vs Relative ValuationConglomerate DiscountComparable Company AnalysisHow to Select Comparable CompaniesTrading MultiplesTrading Multiples
xiiTransaction Valuation
Transaction ValueDeal Value vs Enterprise ValueSources and UsesAccretion and DilutionHow to Analyse Accretion…Leveraged BuyoutManagement RolloverMinority Interest in ValuationControl Premium vs Minority DiscountPrecedent TransactionsLBO ReturnsTrading Comps vs Precedent TransactionsStrategic Buyer vs Financial BuyerHow to Build an…
xiiiValuation Discipline
Decision Rules in ValuationHow Valuation Ranges Improve…Implied AssumptionsImplied GrowthBase, Bull and BearScenario vs Sensitivity AnalysisMargin of SafetyHow to Check Discount…
4Public Equities & Securities Analysis
iEquity Research Fundamentals
Equity ResearchHow to write an…How to build an…SecuritiesCommon StockSecurity AnalysisEquity vs Debt SecurityEquity Research vs Security AnalysisThe ShareholderPreferred StockHow Market Price, Value…
iiEquity Markets and Listings
The Public CompanyPublic vs Private CompanyHow Listing Changes a…BuybackBuyback vs Rights IssueFollow-On OfferingIPO vs Follow-on OfferingThe Primary MarketThe Secondary MarketBonus Issue vs Stock SplitHow to read an…How Corporate Actions Affect…
iiiMarket Data and Liquidity
Market PriceFair Value vs Market PriceHow to Read Equity…How Liquidity Affects Equity…Volume, Delivery Volume and TurnoverMarket Capitalisation, Free Float…Market Capitalisation and Free FloatShare PricePrice Return and Total ReturnVolume Growth vs Price GrowthPrice Return vs Total ReturnHow to Analyse Share…Market DepthVolatility in Equity MarketsLiquidity vs VolatilityThe IndexTrading ActivityLarge, Mid and Small…
ivSector Research
Sector ResearchSecular GrowthSecular vs Cyclical GrowthCompetitive PositionSector DriversThe ThemeThematic ResearchTop-Down vs Bottom-Up ResearchSector vs Thematic ResearchHow to Research a Listed Company, in OrderHow to Update Research…
vEarnings Analysis
GuidanceHow to Read Management…The Revenue BuildConsensusDriver-Based ForecastingThe Forecast ModelGuidance, Forecast, Estimate and ResultThe Margin BuildHow to Read an…How to Find and…How Business Drivers Travel…
viQuality of Earnings
Quality of EarningsRevenue Growth vs Earnings GrowthRecurring vs Non-Recurring EarningsReading an Earnings Release,…How to Read an…One-Off ItemsAdjusted EBITDAReported vs Adjusted EarningsEBITDA vs Free Cash FlowDisclosure QualityEarnings Quality Checks You…Accounting Red Flags
viiValuation Application
The Target a Share…Implied ExpectationsUpsideDownsideThe MultipleThesis DisciplineDiscounted Cash Flow and MultiplesThesis Risk and Valuation RiskHow Valuation Ranges Inform…
viiiResearch Thesis and Models
The Investment ThesisModel AssumptionsHow to build an…Thesis DriversFact vs ThesisCatalysts and the Expectation GapDisconfirming EvidenceTime HorizonVariant PerceptionRe-RatingScenario vs SensitivityConfidence vs CertaintyHow Estimate Revisions Can…
ixCorporate Events
Corporate Events and ActionsCorporate Event vs Research CatalystMergers From a Research PerspectiveEvent RiskAcquisitions From a Research PerspectiveOrganic vs Acquisition-Led GrowthManagement ChangeCapital RaisesCorporate Action Adjustment
xGovernance and Disclosure
Material DisclosureDisclosure vs DisclaimerInsider TransactionsPromoter HoldingGovernance SignalsBoard Independence vs Management…
xiResearch Discipline and Cases
Research CoverageResearch OutputResearch Note vs Research ReportHow to Run an…How Research Post-Mortems Improve…The Peer GroupPeer Group vs Coverage UniverseThe Recommendation in Sell-Side ResearchFact Checking ResearchFact vs Opinion in ResearchThe Quarterly ResultResearch Independence

How to Research a Listed Company, in Order: Eight Steps

Research a listed company in a fixed order. Settle what it sells, read the field it sells into, read three years of its own reporting oldest first, build the revenue line, separate what the company did from what happened to it, and only then build a model. Finish by writing down the two or three questions the answer turns on. The model is step six, not step one.

The order is not a matter of taste. Each step hands the next one something it needs, and a step taken out of turn still produces an output, just with the checking quietly removed. Reading the field before the company is what stops a shared condition from looking like an achievement. Separating shared movement from unshared movement is what establishes which findings belong to the company at all. And a model built before that separation will compute, faithfully and to two decimal places, the consequences of an assumption nobody ever looked at.

In what order is this actually done?

Eight steps, and their sequence is the whole of the method. Five of the eight sit before the one most people begin with. Everything below runs on Sarvani Coatings Limited, an invented maker of decorative and industrial coatings.

By the time a model gets built, which of the company's numbers are its own is already known, and the order exists to produce exactly that. Take that away and the steps become a checklist, and a checklist can be worked in any order without complaint.

The model is the sixth step. The five before it are what make it worth building. 1What itsells 2Thefield 3Threeyears 4Revenueline 5Shared vsunshared 6Themodel 7Thequestions 8Stop these five decide whether the sixth is worth doing the output Sarvani Coatings Limited is invented. The order applies to any listed maker of anything.
A research process reaches the model at the sixth step, after the field, the record, the revenue line and the separation of shared movement from unshared movement.
  1. Say what the company sells, and to whomTwo sentences, no adjectives. What the products are, who buys them, and how they reach the buyer.
    Checking: can this be said out loud to somebody who has never heard of the company, without reading?
  2. Read the field before the companyHow big it is, how fast it grew, who else sells into it, and what moves all of them at once.
    Checking: can what the whole field did last year be stated in one number?
  3. Read three years of the company's own reporting, oldest firstThe filed statements and the company's own commentary, taken in the order they were written.
    Checking: is the direction each main line has been moving clear, and since when?
  4. Build the revenue line before anything else in the accountsWhat is sold, how much of it went out, at what price, to which kind of buyer.
    Checking: can last year's revenue growth be split into volume and into price and mix?
  5. Separate what the company did from what happened to itEvery movement that matters goes beside the same movement at the other makers. Shared in one pile, unshared in the other.
    Checking: for each movement, which pile is it in, and how big is the unshared part?
  6. Only now build a model, and only against a stated questionWrite the question down first, then build the smallest model that can answer that question and nothing else.
    Checking: what will this model establish that is not already known?
  7. Write down the two or three questions the answer turns onEach one with the evidence that would settle it, and where that evidence would show up.
    Checking: could somebody else go and look for the evidence without asking what was meant?
  8. StopThe field is read, the record is read, the two piles are separated, and the questions are written with their evidence.
    Checking: is the work continuing because something is unresolved, or because the model is not finished?

What gets settled before anything is opened?

Step one asks what the company sells, and to whom. Nothing else. No spreadsheet, no filing, no price chart. Two sentences are enough: Sarvani Coatings sells decorative coatings to households through a dealer network, and industrial coatings to manufacturers on contract. Two sentences, two buyer types, one company.

Naming what a company sells gets skipped more than any other step, and it gets skipped because it feels too obvious to bother with. The step is not obvious. Every figure that arrives later has to be interpreted against something, and this sentence is the something. A rise in the average price received means one thing if the company sells more to households through dealers this year and quite another if it does not. A figure means nothing until there is something to read it against, and a reader who cannot state what a company sells in two plain sentences has nothing.

The parallel is a shop on the street. Before anybody can say whether the sweet shop had a good Diwali, they need to know that it sells sweets, mostly to walk-in households, mostly in one fortnight of the year. Nobody writes that sentence down for a shop because everybody already knows it. For a listed issuerA company whose shares are quoted on a stock exchange, so its reporting and its announcements are filed publicly rather than kept private. nobody already knows it, and the two sentences have to be written down.

Debt Capital Markets Bootcamp — Fin Maverick

Why does the field come before the company?

Because a company read first makes shared conditions look like achievements, and there is no way to un-see that afterwards. If Sarvani Coatings is opened first and its margin has improved, the improvement arrives with the company's name attached to it, and the name sticks. Read the field first, and coatings makers in general are already known to have had a better year on input costs. The same improvement then arrives as something to be split rather than something to be credited.

The field yields four small things: its size, its growth, who else is in it, and what moves all of them at once. For the field Sarvani Coatings sells into, that is Rs 48,300 crore of revenue against Rs 43,500 crore the year before, growth of 11.0 per cent, three makers holding 38.0 per cent between them and the remaining 62.0 per cent spread across many smaller ones. Nandivarman Paints Limited alone is 30.0 per cent of it.

The field is not background reading; it is the yardstick every company figure gets measured against, and a yardstick collected after the measurement is not a yardstick at all. An hour on the field before the company is opened is the cheapest hour in the whole process.

Why read three years oldest first?

Because the order a record is read in decides what can be seen in it. Read oldest first, Sarvani Coatings gives a direction of travel: revenue Rs 1,840 crore, then Rs 2,120 crore, then Rs 2,415 crore. Materials took 57.0 per cent of revenue, then 56.0, then 54.0, and gross marginRevenue less the direct cost of what was sold, shown as a percentage of revenue, and the first margin on the profit ladder. ran 43.0 per cent, then 44.0, then 46.0. Three years, one direction, and a question forming about whether the direction continues.

The same read in rupees rather than in ratios is harder to argue with. Materials cost Rs 1,048 crore, then Rs 1,187 crore, then Rs 1,304 crore. Gross profit was Rs 792 crore, then Rs 933 crore, then Rs 1,111 crore. The gap between the two widened in every one of the three years, and no percentage of anything had to be taken to see it.

Read the same company newest first and the answer is 46.0 per cent. One number, no shape. A single observation always looks like a level, and 46.0 per cent read alone is a single observation. Reading newest first is how a peak gets written down as a level, and the mistake is invisible afterwards because the note that results does not record which way the record was read.

Oldest first shows a direction. Newest first shows a position. READ OLDEST FIRST 1,840 2,120 2,415 the direction of travel year one year two year three 43.0% 44.0% 46.0% READ NEWEST FIRST ? ? 2,415 no history, so 46.0 per cent has no shape not read not read year three 46.0%
Reading a company's reporting oldest first shows where it has come from, and reading newest first is how a peak gets recorded as a level. Revenue in Rs crore, gross margin below each year.
Try it out

Why read three years oldest first rather than newest first?

Equity Research Bootcamp — Fin Maverick

Why build the revenue line before anything else in the accounts?

Because everything underneath revenue is a proportion of it, and a proportion that cannot be explained is a proportion that will be explained wrongly. With the revenue line built first, what was sold is known: how much of it, at what price, to which kind of buyer. Sarvani Coatings grew revenue 13.9 per cent in the latest year, made up of about 6.0 per cent volume growthGrowth measured in units sold rather than in rupees, so a price rise on the same quantity does not count as growth. and about 7.5 per cent from price and mixWhich products, grades or customer types made up the sales in a period. A change in mix moves an average without any single price moving. together.

The revenue line has consequences further down. Materials cost Rs 1,187 crore in year two and Rs 1,304 crore in year three, a rise of 9.9 per cent on 6.0 per cent more volume. Per unit of what went out of the door, the input bill went up about 3.6 per cent, not down. The materials ratio still dropped from 56.0 per cent of revenue to 54.0 per cent. RealisationThe average price actually received for a unit sold, after discounts and after whatever combination of products went out of the door. rose faster than input cost per unit did. Most confusion about margins turns out, once the revenue line is built, to be confusion about mix and price rather than about costs at all.

Try it out

Why build the revenue line before anything else in the accounts?

How is what the company did separated from what happened to it?

Every movement goes beside the same movement at the other makers, and the results sort into two piles. Anything the others also did is a condition, something that happened to the company. Anything they did not do is a candidate finding, something the company may have done. The sorting is the entire technique, it costs an afternoon, and it changes conclusions more often than any other step.

Run it on the margin first. Sarvani Coatings gained 3.0 percentage points of gross margin over the two years. Nandivarman Paints Limited gained 2.4 points over the same stretch and Kesaria Surface Solutions Limited gained 3.6. All three rose, and Sarvani Coatings sits between the other two. The margin gain goes in the shared pile, and it goes there no matter how good the company's own commentary about pricing discipline sounds.

One company, two movements, two different piles. MARGIN GAIN, TWO YEARS 2.4 3.0 3.6 Nandivarman Sarvani Kesaria all three rose, so this pile is conditions percentage points of gross margin REVENUE GROWTH, LATEST YEAR 13.9 11.0 Sarvani the whole field 2.9 points not shared not shared, so this pile is candidate findings
Sarvani Coatings' 3.0 point margin gain is shared with both other makers and its 2.9 percentage point growth gap is not, and only setting each movement beside the field separates the two. The two panels carry their own scales, 40 pixels a point on the left and 10 pixels a point on the right.

Now run it on growth. Sarvani Coatings grew 13.9 per cent against a field growing 11.0 per cent, so 2.9 percentage points of that growth were not shared with anybody. In money, growing at the field's rate would have taken Rs 2,120 crore to about Rs 2,353 crore, and the company reported Rs 2,415 crore. The unshared part is roughly Rs 62 crore of revenue. In market shareOne seller's revenue as a percentage of the revenue of the whole field it sells into, measured over the same period. that reads 4.87 per cent one year and 5.00 per cent the next, so what changed hands is 0.13 of a point. On volume alone the gap is 1.5 points, 6.0 per cent against the field's 4.5 per cent.

Two movements, one company, one year, and they belong in different piles. The step that sorts them is the one that changes conclusions most often. The sorting also has a limit. The sorting establishes that the margin gain was not unique to Sarvani Coatings. Why the field as a whole gained margin stays unestablished, and the sorting step does not require an answer.

Where the year of growth came from, in rupees rather than in points. 2,400 2,300 2,200 2,100 2,000 2,120 2,353 2,415 Rs 62 crore the part the field does not explain year two actual at the field's 11.0 per cent year three actual Rs crore. The vertical axis is cut at Rs 2,000 crore so the last stretch is visible. Invented figures.
Growing at the field's 11.0 per cent would have taken Rs 2,120 crore to about Rs 2,353 crore, so roughly Rs 62 crore of the reported Rs 2,415 crore is the part the field does not explain.
Try it out

Sarvani Coatings gained 3.0 points of gross margin and outgrew its field by 2.9 points. Which one is a candidate company finding?

Try it out

The unshared growth moved share from 4.87 per cent to 5.00 per cent. How should that be written down?

Hedge Funds Analyst Bootcamp — Fin Maverick

When does a model get built, and what is it for?

Sixth, and only sixth. Five things are known by then: what the company sells, what the field did, the direction of its own record, how its revenue is built, and the movements that are its own. A model needs exactly those five as inputs, and there is no way to obtain them from inside a model.

Try it out

Suppose the model gets built first and the field is read afterwards to check the assumptions. What does reading the field afterwards fix?

A model's purpose is narrower than most people expect. A model tests whether a set of assumptions is internally consistent, and shows what those assumptions imply when carried forward. A model is not a device for producing a number. A model built before the separation step computes the consequences of an unexamined assumption perfectly. The output then carries the authority of arithmetic, which is worse than having no model at all.

So the question gets written before the first formula. On Sarvani Coatings the question is worth stating out loud: what happens if the shared margin gain reverses while the unshared growth gap continues? The question needs a model with three or four lines in it, not thirty tabs, and it was already in hand before anything was opened.

Try it out

What is a model actually for?

What gets written down at the end?

Two or three questions, each with the evidence that would settle it, and where that evidence would appear. Not a conclusion. On Sarvani Coatings the two questions almost write themselves once the five earlier steps are done. Is the 46.0 per cent gross margin a level or a peak? And does the 0.13 point share gain repeat?

Each one gets an evidence line. The margin question is settled by watching input cost per unit through one full move in input prices. The evidence shows up in the cost of materials against volume, not in the commentary. The share question is settled by next year's volume against the field's volume, 6.0 per cent against 4.5 per cent being the figure to beat. The output of research is a set of questions with their evidence attached, and a process that produces a conclusion instead has skipped the part that made it checkable.

What the process actually produces at the end. THE TWO OPEN QUESTIONS 1 Is 46.0 per cent gross margin a level, or a peak? settled by: input cost per unit of output 2 Does the 0.13 point share gain repeat next year? settled by: volume against the field volume Anyone can go and look for both. That is the test. WHAT IS NOT HERE No target and no rating. No statement about what the share is worth. The work stops one step before a view, and that step is deliberate. Sarvani Coatings Limited and every figure attached to it are invented for teaching.
The process ends with the questions the answer turns on and the evidence that would settle each, so a reader who disagrees knows exactly where to go and look.

When does the work stop, and what must never be a step?

The work stops when the field is understood, the company's own record is read, shared and unshared movements are separated, and the questions are written with their evidence beside them. The work does not stop when the model is finished. A model is never finished. There is always one more segment to split out, one more year to extend, one more sensitivity to run, and none of it changes the two questions already written down.

And one thing must never appear as a step at all. The procedure produces no target for a share price, no rating, and no statement that a company is cheap or dear. The eight steps run right up to the point where a view would be stated, and stop there on purpose. The stopping is not modesty. A view is a different act with different obligations attached to it, and the eight steps are what somebody would need to have done before that act would mean anything.

Try it out

When does the work stop?

Reading an Annual Report Fast — free micro-course from Fin Maverick

What does the whole order look like run on one company?

Here is all eight steps on Sarvani Coatings Limited, with what each one produced and what it deliberately left open. Read the right hand column as carefully as the middle one. The open questions are the part a finished note usually loses.

StepWhat it producedWhat it left open
1. What it sellsDecorative coatings to households through dealers, industrial coatings to manufacturers on contract.Which of the two is growing faster.
2. The fieldRs 48,300 crore, up 11.0 per cent, three makers holding 38.0 per cent and the rest fragmented.Why the whole field gained margin.
3. Three yearsRevenue Rs 1,840, Rs 2,120 and Rs 2,415 crore; materials 57.0, 56.0 and 54.0 per cent of revenue.Whether the direction continues.
4. The revenue lineGrowth of 13.9 per cent, about 6.0 per cent volume and about 7.5 per cent price and mix.How much of the 7.5 per cent is mix rather than price.
5. Shared against unsharedMargin gain of 3.0 points shared with gains of 2.4 and 3.6 points; growth ahead of the field by 2.9 points, worth about Rs 62 crore.Whether the unshared growth was won on price or on distribution.
6. The modelA short model asking what happens if the shared margin gain reverses and the unshared growth gap holds.Everything the model was not asked.
7. The questionsIs 46.0 per cent a level or a peak? Does the 0.13 point share gain repeat?Both, on purpose, each with its evidence named.
8. StopTwo open questions, their evidence, and no view.The view itself, which is a separate act.

Look at what step five did to the reading. Before it, a reader had a company whose margin rose 3.0 points and whose revenue grew 13.9 per cent, and both looked like achievements. After it, one of them is weather and the other is worth about Rs 62 crore and 0.13 points of share. The same statements, read in a different order, produce a different note, and only one of the two orders makes the difference visible.

Play with it

Reorder the steps and watch the findings go out

Selecting a step and moving it earlier or later redraws the diagram in that order, and the findings below it show which ones that order can still produce. The dependencies drawn are the ones the eight steps rest on, and no order produces a view on any company.

Moving the model ahead of the separation step strikes out the finding that only the separation step could have produced, which is what the order is protecting.
Findings still reachable
8 of 8
Steps before the model
5

Educational illustration. The figures behind the findings are Sarvani Coatings' own. The starting order is the eight steps exactly as they are taught above, and it reaches every finding.

The week that cannot be recovered

Meghna Iyer opens a spreadsheet on a Monday and spends five days building a detailed model of Sarvani Coatings, then reads the field the following week to check her assumptions. Her gross margin assumption was set from the company's own recent history, and that history contains a pricing environment the whole field shared. So the assumption carries a condition into the model as though it were a property of the company, and every projected year inherits it.

Reading the field afterwards does not undo this. By then the margin assumption is load bearing: the revenue build, the cost lines, the working capital and the cash flow all sit on it, and revising it means rebuilding rather than editing. The cost is the week, and then a structure that quietly resists the correction.

The fix is only an ordering. The field is read before the model exists, and the separation of shared from unshared movement happens at step five so that step six has something honest to stand on.

One cell, set from history, carried five years forward. YEAR GROSS MARGIN WHERE IT CAME FROM Next year 46.0% set from last year Year two 46.0% carried forward Year three 46.0% carried forward Year four 46.0% carried forward Year five 46.0% carried forward WHAT THE CELL CARRIES A shared move of 3.0 points and an unshared move, added together. Nothing inside the model can tell them apart. Reading the field in week two does not reach back into a cell that five projected years now stand on.
A margin assumption set from a company's own recent history can carry a field wide condition into the model as a company property, and every projected year inherits it.
An assumption becomes load bearing, and after that it cannot simply be swapped. Year 1 Year 2 Year 3 Year 4 Year 5 EVERY PROJECTED YEAR SITS ON THE SAME FEW NUMBERS volume gross margin tax rate Replace the middle pillar and everything above it has to be rebuilt, which is why almost nobody replaces it.
Once an assumption is load bearing across a model, revising it means rebuilding rather than editing, which is why reading the field afterwards does not fix anything.
Reading an Annual Report Fast teaches you to get to the three things that matter in a two hundred page document.

Who actually works in this order, and what do they get out of it?

A credit officer at a bank looking at the same maker runs almost exactly these steps and stops in a different place. Steps one to five are identical. Whether a margin gain was earned or handed over decides whether the cash flow that services a loan is repeatable. The officer then swaps steps six and seven for a coverage test and a covenant, a different sixth step resting on the same five.

An analyst covering twelve makers uses the order to ration attention. Steps one and two are done once for the whole field and reused for every company in it. Field work is the only part of the job that gets spread across twelve names instead of one, and that is the practical reason the field comes first. Step five is then done twelve times, quickly, and it is what tells the analyst which two of the twelve are worth a model at all.

The order protects a small amount of time. A person with an ordinary evening and one company they are curious about gets the most out of it. Steps one to five can be done in an evening with published filings and a calculator, and they are the steps that decide whether the rest is worth starting. Skipping to the model is what turns a curious evening into a week, and the week does not produce a better answer, only a longer one. A household deciding whether to put money into a friend's shop does the same thing without naming it: they ask what the whole street did this year before they ask what the shop did.

One more use, and it is the one that saves the most rework. When somebody else's note invites disagreement, the order shows where to look. A note that never states what the company sells is thin at step one. A note whose margin discussion never mentions the peer setThe small group of other sellers a company is compared against, chosen because they sell into the same field rather than because they are the same size. has skipped step five, and everything after that inherits the gap.

Try it out

The process ends with two open questions and no view. Is that incomplete?

The ideas the steps use are settled elsewhere: what a field driver is, what competitive position means, and how an industry structure is read all sit in the business analysis material. How a note is written up is covered separately, so is valuation method, and updating research after a results release comes next.

Where the material behind this order comes from

Conduct, meaning who may circulate a written view and what has to be disclosed alongside it, is set by the regulator, and requirements and the periods attached to them get revised. The two exchanges below matter for one reason: step three goes to a company's own filed reporting, and that is where the filing sits.

References

Where to goWhat steps three and seven need from itAddressChecked on
Securities and Exchange Board of IndiaThe conduct and disclosure obligations that attach to research once it is circulated.sebi.gov.in28 August 2026
National Stock Exchange of IndiaThe filed statements and announcements that step three reads oldest first.nseindia.com28 August 2026
BSE Limited, the Bombay Stock ExchangeThe same filings for makers quoted there, which matters when only one venue has posted yet.bseindia.com28 August 2026

Sarvani Coatings Limited, Thottam Chemicals Limited, Kesaria Surface Solutions Limited, Nandivarman Paints Limited, Meghna Iyer and the field they sell into are invented.
Educational material. Not advice on any investment, tax, budget or market position.

← PreviousNext →
Fin Maverick Micro CoursesExplore Micro Courses
Fin Maverick BootcampsExplore Bootcamps
Fin Maverick

Finance education that ends in a job, not a certificate that gathers dust. Built for young India.

LEARN
CalculatorsFrameworksComparisonsCareersShowdown
RESOURCES
All CoursesMicro CoursesBootcampsInternships
COMPANY
AboutJob openingPartnership
LEGAL
Privacy PolicyTerms & ConditionsContent LicenseReturn & Refund Policy
© 2026 FIN MAVERICK / BUILT FOR INDIA.DO FINANCE, DO NOT JUST READ ABOUT IT.