New York, NY – Crisil, India’s largest ratings agency, has decided to expand its equity research offering by producing research on uncovered public companies. This follows an announcement in September when the ratings firm started producing independent equity research on Indian listed companies.
The Crisil initiative is the latest that has been announced in the past few years to provide equity research on companies with limited coverage. In recent years, exchanges like the LSE, AIM, NYSE, Nasdaq, Singapore, Hong Kong, and Bursa Malaysia have announced programs to offer research to their members. Earlier this month, a private consortium Irideus.org announced that it was also planning to produce equity research for uncovered companies on a global basis.
Historically, a very small percentage of all listed companies obtain research coverage – either from investment banks, brokerage firms, or independent research boutiques. These firms are typically the most liquid companies in their respective markets. Less liquid micro and small cap firms generally languish with little to no research coverage. Some estimates suggest that as many as 25,000 public companies currently do not get any research coverage whatsoever.
Efforts from firms like Crisil, or the recently announced Irideus.org venture, are likely to promote research coverage by selling their capabilities through stock exchanges in an effort to give smaller listed companies access to high quality research coverage.
Crisil’s new research service will provide listed companies with grades for both their fundamentals, as well as the companies’ valuation. This is different than Crisil’s IPO grading service which it has been producing since 2006, where rated companies only get a grading on their fundamentals.