At a time when Crisil plans to launch grading of listed companies, Roopa Kudva, Managing Director and Chief Executive Officer, CRISIL & Region Head, Standard & Poor’s, South Asia spoke to Hindustan Times about about how this would benefit the companies and individuals. Excerpts:
What is the idea behind grading of listed companies?
Most of the equity research is only on BSE top100 companies. Our focus will be on companies that have no coverage. There are 7,000 listed entities; the idea is to create awareness about the fundamentals and learning prospect on these. We talked to companies, brokers and investors and the feedback is that it’s a new concept and which is not widely prevalent globally.
What will your report cover?
We will comment only on the fundamentals of the company but won’t comment on the price front. We will grade them on a scale of 5.
Where is the value?
That has a value because today there is no information even on well-known mid-cap companies. The idea is not to cover companies, that are already covered.
What is the revenue model?
It is the similar to the ratings business. The companies will approach us for the grading and will pay for it.
Why will someone pay to get a bad grade?
It is simply because today there are many good companies for which there is no trading happening. They want to get into the minds of the investors. These companies are willing because they think that at least people will have some information about the company. So even if they get bad grade they are not worried, because at least there would be information on them in public domain.
How will it be different?
Generally in the brokers recommendation to buy, hold or sell is based on three questions — how good is the company, if it is good is the price right, and is it the right investment for me?
We are breaking up what you see as a buy, hold or sell and then you can seek the help of a financial advisor to tell you whether it is the right investment for you.
How confident are you of companies’ response?
I know that it will take some time to pick up. Initially, companies who are transparent and are looking to increase trading will come.
Most reports appear surface-level?
Our survey shows that 75% of the surveys are biased. In the US it is 93-94 per cent. We are not commenting on investing, but will offer only fundamental analysis of the company.