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The $3.4-billion independent investment research provider Morningstar is planning to step up its activities in India.
The company hopes to more than triple the number of stocks its analysts cover in India, according to Joel Bloomer, head of Asia-Pacific equity and credit research at Morningstar.
“My hope is that by the end of 2014 we’d be pushing towards a hundred. That’s the kind of rough plan at this point. I wouldn’t necessarily promise that but that’s what we are hoping for,” he said on the sidelines of the Morningstar Investment Conference, 2013. “Morningstar is definitely investing in research while a lot of other research houses are actually cutting back. A lot of our competitors are actually reducing the number of analysts.”
The Chicago-headquartered firm has a presence in 28 countries and had revenue of $650 million in 2012. The entire Indian institutional broking business is estimated to be worth less than $500 million. The company currently covers 20-30 stocks in India.
Independent equity research is different from equity research offered by brokerages. Brokerage companies often provide the research for free but do business with the companies they cover, leading to a potential conflict of interest.
In the case independent research entities, the investors himself pays for the research.
Rating agencies offer research which is divorced from broking. Other providers of research under the ‘independent’ banner generally comprise of companies which rely on investor subscriptions for revenue.
A 2011 study by Crisil suggested that 90 per cent of the 6000-odd listed companies in India do not have any research coverage at all. This list is said to have shrunk further following cost cutting by research houses on falling broking revenues, according to market sources.
