Investors need to make decisions based on certain factual information. Subsequently, they make future assumptions based on those facts. As such, knowing how an industry and a company functions is very important. In addition, it is equally important for one to gain such information from proper and reliable sources.
Hence, we present herewith a basic idea of where you can go about looking for information on companies you wish to invest in.
Sources of information on companies
Offer documents: For a novice investor, it is always recommended that he understands a sector and its dynamics before jumping into understanding the workings of a particular company. One of the best sources for understanding a particular sector or industry is the offer document of the company (or a peer group company), if one can get hold of one. Every company which gets listed on the stock market needs to file an offer document with the Securities & Exchange Board of India (SEBI). Apart from facts and figures about the company and its promoters, this document also contains information relating to the working of the industry (the company is involved in).
One may refer to SEBI's website to see the offer documents that have been issued over the past few years.
Annual reports: In case of a company for which you cannot get hold of the offer document given that the company has been listed on the stock exchanges for long, the annual report comes in handy. The director's report and the management discussion and analysis (MD&A) sections of an annual report provide good information related to the company and industry. However, as compared to the offer document, this information is usually related to the past year and the management's views on the outlook for the next year. Having said this, it would be advisable for one not to blindly take the management's views into consideration as more often than not; it tends to paint a rosy picture.
BSE/NSE announcements and company press releases: We at Equitymaster have always believed in attaining information straight from a company rather than from a third party. Even if an investor gets some 'inside information' on a particular company, it is difficult to determine how factual and accurate it is. Apart from annual reports (which are published on an annual basis), it is the official company documents such as press releases, announcements and presentations which are released in regular intervals. The source for such information is the BSE or NSE websites (in their respective corporate announcement sections) and the company's website.
Business dailies and other media: Newspapers and news channel are a great medium for gaining updates on companies. Interviews with managements provide good information on the views, plans and strategies of companies. However, information divulged from sources who do not wish to be named can be dicey. Reporters and journalists may get such news printed as they try to snoop around and find out stories relating to a particular company. But there have been a handful of cases wherein companies (on whom the news has been reported) have made announcements stating that the information is speculative or not true. As such, it would only be possible for an investor to judge the piece of news / information provided he is well acquainted with the company and its working.
Equitymaster.com
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