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NISM Certifications · NISM-Series-XV: Research Analyst · Qualities of a Good 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 reason for choosing 24 times. Which quality of a good report is mainly missing?

The missing quality is transparency of assumptions and methodology. A good report must disclose the EPS estimate and justify the 24 times multiple so that readers can understand, test and reproduce how the Rs 840 target price was derived.

  1. ATransparency of assumptions and methodology so that the target can be reproducedCorrect
  2. BUse of a shorter report length
  3. CUse of more technical jargon
  4. DA larger number of charts

Explanation

A target price must be supported by stated assumptions, the EPS estimate and the rationale for the multiple. Without them the reader cannot verify or replicate the valuation. Length, jargon and charts do not fix this gap.

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