Company Analysis is an essential consideration to create long term wealth out of stocks. It is significant to understand the Company before investing. Analysing a Company carries a series of steps that generally needs to be gone through to reach a decision.

Steps in the Company Analysis process:

• Identify the company and industry’s economic characteristics: We need to start by knowing about the Company and the industry it operates in. Suppose we want to invest in Ixigo (Le Travenues Technology Pvt. Ltd.).This Company is in the tours and travels sector (Consumer discretionary). It focuses on empowering Indian travellers to plan, book and manage their trips across rail, air, buses and hotels.

• Identify and know about the products and services: After getting an overview of the Company, we must find out about the business model. we must also check the nature of the product/service, uniqueness, demand and supply dynamics, brand awareness in the geographical area Ixigo is engaged in the business of running online platforms named www.ixigo.com and www.confirmtkt.com and ixigo / confirm ticket mobile applications for providing information and booking services for the travel industry across airlines, trains, hotels, buses and cabs in real-time. The Group also provides software development and maintenance services to its customer.

• Understanding the risks and concerns about the Company: Every business and industry carries its own set of risks and concerns which might impact the performance and profitability of the Company. So, as an investor, it is essential to get an idea as to the risks the Company is exposed to in case of any eventualities. For example, the biggest challenge for the travel companies at present is to tide over the muted demand of the current COVID pandemic in the most creative ways by focusing on high growth segments. The Company’s annual report also contains the risks and concerns that the Company is exposed to. We can get it under the “Management Discussion and Analysis “ section where it will list the risks that the travel company might face in its operations along with the steps to overcome those situations.

• Analyzing the Financial Statements: This is a crucial step in the process to analyse a Company. The financial statement gives us the actual quantitative picture of any company which is an important part. When evaluating the Income Statements, we check on the margins, the top line, and the bottom line. From the Balance Sheet, we get an idea as to how strong the company financially is. Cash Flow Statements gives us a thorough picture of the cash balance which is generated from the operating, investing and financing activities of the Company. It helps in understanding the firm’s liquidity position. Finally, it is also important to go through the ratios and highlight the comparison with the past periods or relative to the other players in the same industry.

Methods of Company Analysis:

• Top-Down Approach: In the top-down approach, the investors start analyzing by looking at the macroeconomic factors like monetary policy, inflation, economic growth, broader events before digging deep into the individual stock. The investor looks for the factors, events prevailing in the market and tries to understand the opportunity that could be derived from it.

• Bottom-Up Approach: In this approach, we start by analyzing the individual companies and then building a portfolio based on the specific attributes. Investors tend to focus on the micro-economic factors in this method of investing.

Therefore we must consider qualitative as well as quantitative factors before investing. Qualitative factors include business model, competitive advantage, management and corporate governance. Quantitative factors deal with the Company growth and industry growth along with its peers.