STOCK PITCHES

Jhawar, Aayush
Overview:

In the field of Equity Research and Security Analysis, the companies have to sell their reports/
recommendations to clients which involves great deal of marketing efforts. This work is done generally
by Partners and not by people beginning their careers. But, companies often ask for a Stock Pitch to see
if you are a partner material – can you be groomed to stay long term in the organization – is your
communication strong and articulate!

Thus the sole objective of asking a stock pitch is testing your communication and confidence. Of course,
the content of the pitch should also make sense but it need not be some high level analysis! As far as my
experience is concerned, I have not come across or heard any interview where cross questioning
happens on what you say in the stock pitch but it’s better to be equipped for it.

Companies that ask for Stock Pitch:

- Equity Research Companies: eg. Goldman Sachs (they love this question in the interview – more
often than not they ask)
- Portfolio Management Companies

However, there may be some random interviewer who based on your CV may ask for a stock pitch!

Pattern:

- Time: 1-1.5 minutes max – GS puts a timer in front and stops you after 1 min.
- Which Stock: Generally they leave it upto you to chose (as in: “Give a pitch on any stock of your
choice”) but its better to be prepared on atleast the companies that are mentioned on your CV.

Structure:

- Hook
- Recommendation
- Industry
- Thesis for the recommendation
- Catalysts and Risks
- Closure

Example: Stock Pitch of a Petrochemical Company (Hypothetical)

Hook: The past 2 quarters, marked by strong crude oil prices and declining rupee, saw a dwindling
petrochemical sector but there was one player that displayed an EBIDTA growth of over 10% creating a
mark of its own. Co. XYZ has outperformed the industry.

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Recommendation: I pitch Co. XYZ with a strong BUY recommendation with a Target Price of XX showing
an upside of XX%.

Please note: Its not important to be accurate in this – they don’t expect you to know this – but upar upar
se you should be able justify – ki kyu aisa lagta (Ideally if you take up companies of Corp Val or IB
projects – all this work must have already been done u just need to put them in words) – you wont be
questioned on this by Goldman Sachs for sure but a JM Financial may ask few questions asking u to
justify things. So have a brief background ready ki kaise value nikala!

Industry: Just give a line on this not that important – here if u notice my hook has given a flavor of the
whats happening in the industry – so I would not waste more time here. In Industry u generally give ki
kya trends chal raha hai, drivers kya hai, players kitne hai – wrap it up in a line or max 2.

Thesis: This is most important – yaha you will say why do think one should buy

I back my recommendation with 3 key thesis points:

One, the company implemented an efficiency module which is expected to cut costs and thus drive up
EBIDTA

Two, company has made major investments the benefits of which is likely to start soon and thus drive
up earnings and therefore propel valuations

And Third, the majpr competitor has seen a set back due to plant shut down which shall increase our
sales….

Note: Here be crisp to the point 3 strong bullets! I am sure in your projects you must have come up with
this – u just need to draft them up – your assumptions of growth etc are all your thesis – so put it here!
Remember, anything that will increase earnings – will increase FCFF and thus DCF value and vice versa.

Catalysts: This means what event which if happens will strengthen my recommendation.

I consider early operation start off at the new investments which is likely to happen based on
management updates, act as catalyst to my recommendation.

Risk: Mention 2 risks

However, rise in crude prices and irregular shut down of refinery are risks to my recommendation.

Conclusion: With full confidence – reassert your recommendation

Thus, based on my thesis backed strong catalysts, I back my recommendation of a strong BUY for Co.
XYZ!

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General Note: All the blue text above form the pitch – based on your prep and analysis, you can add
more on thesis part or industry part and time yourself for 1 minute and 1.5 minute as well! You never
know for what duration will they ask you to pitch. Ideally have a strong 1 minute pitch ready! But don’t
just vomit in the interview jisse interviewer ko lagega ratt ke aya hai!

Some Suggestions:

1. Pick up the 3-4 companies in your CV and prepare a pitch on all of them
2. Out of the 3 keep 1 which you are most confident on and when given a choice speak on that
3. Have it in a word doc which you can look before the interviews
4. Have your QnA prep also – which anyways is going to happen since it is mentioned in the CV
5. Be very clear and confident – that’s what is being tested in the pitch
6. This is one of the ways in which equity research companies pitch – but if you feel uncomfortable
with the structure – make yours own –just keep in mind you cover the above points and are
confident!

Wish you all the Best!