Globally, and in India, equity research is broken into two parts viz. sell-side and buy-side equity research. The difference is the type of company that employs these analysts on their rolls. Let us look at the role of a sell slide analyst. Normally, sell-side equity analyst works for a brokerage house which manages client accounts. Such a sell side analyst could either cater to the institutional clients, HNI clients, corporate clients, investment banking clients or even retail clients. Let us understand what these sell side analysts do?

· Sell-side equity analysts build models that will project future earnings of a company. They also embellish their analysis with qualitative analysis from channel partners like dealers, suppliers, wholesalers, retailers, customers etc.

· They normally follow a shortlist of companies, specializing in one or two sectors only. These sectors include banking, autos, IT, metals, consumer discretionary, consumer staples etc.

Let us know turn to what buy-side analysts do

Buy-side analysts work for an investment management company managing pension funds, mutual funds, hedge funds etc. They conduct research and make recommendations to the portfolio managers of the fund.

· Buy-side equity analyst focuses on finding quality stocks for a fund, based on investment objectives. Equity research process is largely the same, with only the target client changing in the latter case. Otherwise the process is largely the same although the tracking is more broad based. Both qualitative and quantitative analysis is done to form recommendations.

· Buy-side equity analysts have broader coverage responsibility and normally focus on three to four industries at a time and follow up to 50 stocks.

· Buy-side research is proprietary and only the broad findings are shared with other clients. Normally, any buy side research is supplemented with public or purchased research from sell-side analysts.

In brief, sell-side analysts are paid commission for ideas. Buy-side analysts are paid based on stock or fund performance. The role of both the types of analysts is broadly the same.