NISM-Series-XV: Research Analyst · Qualities of a Good Research Report
Types and Purpose of Research Reports
Updated 11 October 2026 · Fact-checked
Research reports are written documents in which an analyst presents views and reasons on securities, sectors or themes. Main types are initiation, update, sector, thematic and quantitative reports. Their purpose is to help clients and investors make informed decisions. To answer questions, match the scope of the report to its type.
Understand Types and Purpose of Research Reports
A research report is a structured document where an analyst sets out an opinion on a security, a sector, a theme or a set of securities. It gives the facts, the analysis and the reasoning behind the view. The reader should be able to see why the analyst reached the conclusion.
The type of report depends on the scope and the trigger. Ask two things: what is being covered (one company, one industry, one idea, or a data-driven screen), and why is it being written (first coverage, new information, or a broader view).
An initiation report is the first full report when an analyst begins coverage of a company. It is detailed. It covers the business, industry, financials, valuation, a rating and risks. An update report follows later. It reflects new information such as quarterly results, a corporate action or a management change. It is shorter and focuses on what changed and whether the view, estimates or target price change.
A sector (industry) report looks at a whole industry: its size, growth, demand and supply, regulation, competition and the outlook for companies in it. A thematic report is built around a broad idea that cuts across sectors or companies, such as rural consumption, infrastructure spending or digitisation. It then identifies securities that may gain or lose from that theme. A quantitative report uses numerical data and models, such as screens, factor rankings and statistical tests, to support conclusions with less reliance on narrative judgement.
The purpose is to inform and support decisions. Reports serve clients and investors by giving a reasoned view, a basis for valuation and the risks involved. They also create a record of the analyst's reasoning, which supports transparency and compliance. A report is not a guarantee of returns.
Key formulas to remember
- Initiation report
- First coverage → full, detailed report
- Covers business, industry, financials, valuation, rating and risks.
- Update report
- New event or data → shorter report on what changed
- Triggered by results, corporate actions or news. Reviews estimates, rating and target.
- Sector report
- Scope = whole industry
- Covers demand, supply, regulation, competition and outlook.
- Thematic report
- Scope = broad idea across sectors or companies
- Example themes: infrastructure, digitisation, consumption.
- Quantitative report
- Method = data, models, screens and statistics
- Conclusions rest on numbers, not mainly on narrative.
How to solve Types and Purpose of Research Reports questions
Use this method for any question on types or purpose of research reports.
- 1Read the question stem and underline the scope: one company, one industry, a broad idea, or data-based.
- 2Look for the trigger: first coverage, new results or news, or a wider view.
- 3Match the scope and trigger to the type: first coverage means initiation, new event means update, whole industry means sector, cross-sector idea means thematic, models and screens mean quantitative.
- 4If the question asks about purpose, choose the option about informing clients and supporting decisions.
- 5Eliminate options that promise returns or call the report a guarantee.
- 6Check for words like 'first', 'detailed', 'brief' and 'across sectors' before you mark the answer.
Quickest way: Keyword matching
When to use it: Use when you have under a minute for a definition or matching question.
- First coverage or detailed introduction: initiation.
- Results, news or event, short revision: update.
- Whole industry: sector.
- Broad idea across sectors: thematic.
- Numbers, models, screens: quantitative.
- Purpose: inform decisions, never guarantee returns.
Common mistakes in Types and Purpose of Research Reports
Calling any report on a company an initiation report.
Students focus on the single company and ignore the word 'first'.
Fix: Initiation means the start of coverage. Later reports on the same company after an event are updates.
Confusing a sector report with a thematic report.
Both cover more than one company.
Fix: A sector report stays inside one industry. A thematic report follows an idea that can cut across industries.
Thinking an update report repeats the full initiation content.
Students assume every report is complete.
Fix: An update focuses on what changed and its effect on estimates, rating and target price.
Treating quantitative reports as having no analyst judgement.
The word 'quantitative' suggests pure numbers.
Fix: They rely mainly on data and models, but the analyst still designs the method and interprets the output.
Choosing an option that says the report assures returns.
Students link the purpose to making money.
Fix: The purpose is to inform and support decisions. No report guarantees returns.
Worked examples
Example 1
An analyst begins coverage of a listed company and publishes a detailed report on its business, industry, financials, valuation, rating and risks. Which type of report is this?
A) Update report
B) Initiation report
C) Thematic report
D) Sector report
Show the solution
- The scope is one company, so a sector or thematic report is unlikely.
- The trigger is the start of coverage, shown by 'begins coverage'.
- The content is detailed and complete, which matches an initiation report.
- An update would be shorter and tied to new information.
Answer: B) Initiation report
Example 2
A report examines how rising rural incomes may benefit fast-moving consumer goods, two-wheeler and fertiliser companies and names securities that may gain. Which type is it?
A) Initiation report
B) Update report
C) Thematic report
D) Quantitative report
Show the solution
- The central point is an idea, rising rural incomes.
- The idea spans several sectors: consumer goods, two-wheelers and fertilisers.
- A report built on a broad idea across sectors is thematic.
- It is not about first coverage, new results, or a model-driven screen.
Answer: C) Thematic report
Exam tips
- Questions are usually definitional. Learn one-line scope and trigger for each type.
- Watch for stem words such as 'first', 'after quarterly results', 'whole industry' and 'across sectors'.
- For purpose questions, pick the option about informing clients and supporting decisions, not guaranteeing returns.
- With negative marking, skip a question only if two options still look equal after you check scope and trigger.
Practice questions from Qualities of a Good Research Report
- Which of the following is the most appropriate way for a research analyst to present a price target in a research report?
- An analyst's report says the target price is Rs 840 based on 24 times FY27 estimated EPS, but gives no figure for the estimated EPS or the r…
- An analyst's report values Sundaram Auto at a target price of Rs 900 using a P/E of 18 on estimated EPS. Which addition would most improve t…
- A report states: 'Company A's net profit was Rs 200 crore on sales of Rs 2,500 crore, so the net profit margin is 8%. We estimate the margin…
- Which practice best shows that a research report meets the standard of a clearly stated and reasoned recommendation?
Types and Purpose of Research Reports in other exams
The same ground in other exams, if you are preparing for more than one or want another angle on it.
Types and Purpose of Research Reports: frequently asked questions
What is the difference between an initiation report and an update report?
An initiation report is the first detailed report when an analyst starts covering a company. An update report comes later and reflects new information such as results or a corporate action. It is shorter and focuses on what changed.
What is a thematic research report?
It is a report built around a broad idea, such as infrastructure spending or digitisation, that can affect several sectors or companies. It then identifies securities that may benefit or suffer from that idea.
How is a sector report different from a thematic report?
A sector report covers one industry in depth, including demand, supply, regulation and competition. A thematic report follows an idea across industries.
What is the purpose of an equity research report?
It gives clients and investors a reasoned view with analysis, valuation and risks so they can make informed decisions. It does not guarantee returns.