Prabhat Awasthi
35/Head of Equities & Research
RESEARCH HOUSE: Brics Securities
SECTORS: Metals, Auto, Telecom

Prabhat Awasthi is enjoying the best of both his worlds. He quit JP Morgan a year ago and set up Brics Securities with two of his colleagues. The Hong Kong-based J.V. Gokal Group, which provided the necessary finances and infrastructure, leaves the actual running of the organisation to him. "The degree of freedom and the feeling of entrepreneurship are great," smiles Awasthi. This IIT Kanpur and IIM Lucknow alumnus, who has previously worked at crisil, sski and JM Morgan Stanley, has a simple policy when calling stocks: price discipline and self restraint. In other words, he steers clear of the herd. Awasthi was particularly chuffed when his contrarian call on Bharti Tele-Ventures (he recommended "buy" at Rs 133 in September 2003; today it is trading at Rs 208) was proved right. He also accepts that analysts can make mistakes. "If one has made a wrong call, one should be able to muster the courage to change it," he had told Business Today last year (yes, he's made it to this list for the second year running). But what really drives him is being ahead of the curve. "Right now I am trying to find exciting mid-caps," he informs. His team is also in the process of setting up a derivatives division, which should be operational in a couple of months. But if all this makes you think that Awasthi is just another successful number cruncher, think again. He boasts a personal library of over 500 books, reads "pretty much everything", is a diehard rock music fan and also plays a mean guitar. A colleague reveals that about the only thing that gets his goat is when she plays Enrique in her car. Awasthi is also a compulsive traveller: he makes it a point to take at least two holidays, one abroad and another within the country, every year. Last year it was Greece and Kerala. "This year it's hard to say, but I'd like to increase the breadth of clientele at Brics and be recognised as the best research house," he signs off with a smile.

-Priyanka Sangani

Anirudha Dutta
39/Senior Investment Analyst
RESEARCH HOUSE: CLSA
SECTOR: Mid-caps

Fund managers have always loved mid-cap stocks because of their huge upside potential. And now, thanks to the good work done by mid-cap analysts like Anirudha Dutta, life has become a lot easier for them. Dutta "cherry picked" and recommended several mid-cap stocks after the bloodbath of May 2004 (when the BSE Sensex crashed around 900 points from 5,757 on May 6, 2004, to 4,835 on May 28, 2004; shareholders lost an estimated Rs 2,26,345 crore). His picks included Rico Auto (moved up from Rs 25.60 on June 2, 2004 to Rs 61.10 on April 12, 2005), Shree Cement (moved up from Rs 155 to Rs 335) and Sesa Goa (moved up from 347 to Rs 734). He worked with organisations like Tata Steel, DSP Merrill Lynch and ICICI before joining CLSA in September 2003. And he can also boast of degrees like B.Tech (Hons) from IIT Kharagpur and PGDBM from XLRI Jamshedpur.

-Narendra Nathan

Manish Jain
34/Head of Global Emerging Markets
RESEARCH HOUSE: Deutsche Securities
SECTOR: Pharmaceuticals

Even after switching to a new organisation, Manish Jain, an MBA from Narsee Monjee Institute of Management Studies, Mumbai, continues to be the favourite of Indian fund managers. Most fund managers, however, regard him for the reports he produced when he was with DSP Merrill Lynch. There is a fall in his rating as well. The number of references this year dropped to four, down from an envious eight references last year. Jain is of the view that an analyst needs to have a clear view and perspective of the issues he's dealing with. Wonder what he'll make of his lower rating?

-Narendra Nathan

Sanjeev Prasad
33/Senior Analyst, Institutional Equities
RESEARCH HOUSE: Kotak Securities
SECTORS: Telecom, Oil & Gas, Chemicals, Media

Getting Sanjeev Prasad to talk about himself is like trying to extract water from stone. Most questions are met with a genuinely reticent "Why is that important?" or "That's in the past!" or "How is it relevant?" But dig a little deeper and you realise what makes this painfully shy IIM Calcutta-IIT Delhi alumnus tick. Bold investment decisions like the one to upgrade the Reliance stock to "buy" in the midst of L'affaire Ambani late last year or the decision to stay away from Bharti Tele-Ventures even as the stock kept sashaying northwards, have been Prasad's hallmarks. "The Reliance decision (at a time when everyone else was selling) was simple: the fundamentals of the company were (and remain) strong and what is likely to emerge from the dispute is greater transparency; so we saw value in the stock," explains this six-footer who claims he has little time for other interests. "What are those? Who has the time?" he asks, before confessing that one of his favourite authors is Kazuo Ishiguro, the Booker prize-winning author of The Remains of the Day.

Prasad has been mandated with coverage of four disparate sectors-energy, chemicals, telecom and media. Isn't he spreading himself too thin? "Let me put it this way: the first two are my bread and butter; and there isn't enough happening in the other two to justify full-time attention," he remarks candidly. So what makes a good analyst? "In one word-objectivity. Don't convey the management point of view. Do your own analysis." He's done plenty of that in his nine years at Kotak.

But why is he negative on Bharti, a company that's made millionaires out of lay investors? "The competition in this sector is yet to play itself out. People seem to be looking at growth (for the company) without a fall in the average revenue per user (ARPU). I don't buy that. I feel the ARPU for the company will fall more than the market anticipates." For all his reticence, he does shoot pretty straight.

-Priya Srinivasan

Rajat Rajgarhia
29/Head of Research
RESEARCH HOUSE: Motilal Oswal
SECTOR: Banking

True to the spirit of the research house he works for, Rajat Rajgarhia is a value hunter. For him, the most important thing is value that has not yet been discovered by the market. The next is margin of safety (buying at a huge discount to the intrinsic value of the company). Also on his radar are stocks that are on the high growth curve. Though it is very difficult to find stocks with all these attributes, he has achieved that in the past. "All the three aspects I mentioned above were available in the PSU banks and we kept on researching one after another," he says with obvious glee. For example, he had a buy recommendation on Punjab National Bank (PNB) in March 2002, when it was quoting at Rs 31. It's moved up 13 times since then to Rs 393 on April 12, 2005. "Despite this climb, PNB is still grossly undervalued," he feels. Another example: UTI Bank. He placed a "buy" call on it two years ago when it was at Rs 35. The stock closed at Rs 227 on April 12, 2005. "It is now one of the best private sector banks," he says.

His job as Head of Research at Motilal Oswal Securities also involves co-ordinating the work of other analysts and taking the best ideas to his clients. He also has to take calls on the overall economy and the sectors that are expected to do well. "It's not very difficult; it's only a question of time management," he says. It helps that unlike other analysts who are either CAS or MBAs, he is both. "Chartered accountancy was something my father wanted me to do and the MBA is something I wanted. So there's no conflict in the family now."

There's also very little time for conflicts, considering that he clocks about 14-16 hours a day at office. This means he has very little time to pursue other interests. "My hobby is finding good stocks for my clients," he laughs.

-Narendra Nathan

Shirish Rane
32/Vice President, Research
RESEARCH HOUSE: SSKI
SECTORS: Metals, Cement, Engineering

Flamboyance is not his style, but Shirish Rane is one of the most sought after analysts in India. He is also rated very highly by fund managers. That's because his reports consistently hit the bull's eye. Rane was among the few analysts who spotted the opportunity that the emerging infrastructure boom offered construction companies. Stocks like Gammon, HCC and Nagarjuna Construction have jumped by 300 per cent or more in the last nine months since his report. "They are still looking good," he says confidently. Cement and metals are two other sectors he's bullish about.

How does he zero in on winners? "I mostly follow the top-down approach," he explains. That means he first analyses the sector and then narrows down to individual companies within that sector. But that doesn't mean he also follows the routine top-down strategy of investing in big players from a good industry. "I have no size bias. What matters is the net return to investors," he informs. And he doesn't have a one-size-fits-all kind of strategy for all sectors and stocks. What he looks for are future prospects (as measured by the future expected cash flows). And once he arrives at the fair value for any stock, he is not afraid to put it as the target price. Rane also advises private equity funds on investments in the secondary market.

Like many others featured in this article, Rane likes to spend his free time with his family. "My favourite pastime is playing with my two-year-old son," says the avid movie buff and book aficionado. Before joining SSKI Securities in 2003, this engineer (Govt. Engineering College, Pune), MBA (Jamnalal Bajaj Institute, Mumbai) and Associate of the Chartered Insurance Institute, London, worked with CRISIL, Hathway Investments and Peregrine Capital India. Interestingly, equity research is his second career. Earlier, in 1993-94, he wrote software at Mahindra British Telecom. "I was fascinated by equity research and thought the career suited my analytical strengths," says Rane. Clearly, he knew all about gazing at crystal balls even then.

-Narendra Nathan

Anand Shah
33/Vice President
RESEARCH HOUSE: ICICI Securities
SECTOR: FMCG

Anand Shah loves adding to the list of abbreviations after his name. That's why he's burning the midnight oil obtaining a Chartered Financial Analyst certification from the US-based CFA Institute. This is in addition to his Chartered Accountancy (he ranked 12th on the merit list in India in the 1994 ca final) and Cost Accountancy qualifications. And no prizes for guessing his other interest: reading all the financial magazines he can lay his hands on. But he's not your run-of-the-mill bookworm. "I enjoy watching Bollywood flicks," he admits a tad shyly. But his biggest stress buster is "playing with my two-and-a-half-year-old son".

What would he consider his success stories? Pat comes the reply: "Tata Tea and Godrej Consumer Products." In 2002, Tata Tea's margins were under pressure. It had just acquired the UK-based Tetley through a leveraged buyout and the interest costs were weighing the company down. Investors took a dim view of this and hammered the stock price down to Rs 160 that September. Shah, however, was convinced that the Tata management would tide over the crisis. It took three years, but Shah's call paid off. The Tata Tea stock closed at Rs 523 on April 12, 2005. "We understood the strength of the Tetley brand and saw logic in the way the company was carrying out its restructuring operations," says Shah.

He again saw what others missed in Godrej Consumer Products. "They had excellent business potential in the hair care segment and a very strong brand," he says. The upward spiral of the scrip over the last couple of years (from Rs 70 in 2002 to Rs 292 on April 12, 2005) proves Shah right.

So, what makes a good analyst? He feels it is "the ability to take a longer-term horizon on stocks and the capacity to visualise how things will pan out in future". It's probably his varying stints at audit firm Lovelock & Lewes, investment advisory firm UTI Investment Advisory Services, investor services outfit Dalal & Broacha and stock broker First Global that give him this insight.

-Priya Srinivasan

Ajay Sharma
29/Senior Investment Analyst
RESEARCH HOUSE: CLSA
SECTOR: Pharmaceuticals

If it was his report titled attack of the clones (on the emergence of Indian pharma companies as a force in the global generics market) that won him accolades from fund managers in 2002, this time, it is his in-depth study on the impact of the recent introduction of the product patents regime on MNC pharma companies (titled Patent Patience). Ajay Sharma represents a new trend of people qualified in particular sectors entering equity analysis. Sharma completed his Bachelor of Pharmacy from Benares Hindu University before enrolling at IIM Ahmedabad for his MBA. And before joining CLSA in April 2002, he worked with Morgan Stanley's investment banking joint venture in India.

-Narendra Nathan

Rahul Singh
33/Vice President, Research
RESEARCH HOUSE: SSKI
SECTORS: Telecom, Oil & Gas

Rahul Singh is a very different kind of analyst. It's not just his grades (iit Mumbai, Rank 5 in 1993; IIM Lucknow, Rank 1 in 1995) or his uncanny ability to pick winners (he recommended Bharti Tele in January 2003, when it was quoting at Rs 20), but the way he goes about his job. While preparing a report on the "growth in Indian wireless sector" in September 2004, he took to the roads (or tracks, to be more precise) in Mumbai to collect first-hand data on mobile ownership levels across population groups. The results were interesting: penetration levels were 80 per cent in first class, but only 30 per cent of second class travellers possessed mobile phones. "In a seemingly saturated market like Mumbai, our observational research showed that a large untapped market exists among the lower income classes," informs Singh, who enjoys watching movies and reading history books, when he's not tracking stocks or playing with his five-month-old son.

He's also good at more complicated analysis. In November 2004, he recommended HPCL and BPCL based on a "linear equation analysis with unknown variables". Shorn of the jargon this means "because of the uncertainty in the earnings streams (due to global crude price trends and the government's objective of controlling inflation), these companies were trading at close to the replacement cost of their refining and pipeline assets. That meant investors were getting the marketing assets free", he says.

Singh tracks cyclicals closely. "Here, one has to take a medium- to short-term view of industry cycles and arrive at valuations based on mid-cycle figures. This way, you get the opportunity to buy at the bottom and sell at the top of the cycle," he explains. This often makes for quick returns. He placed a buy call on Petronet lng at Rs 28 and downgraded it two-three weeks later when the price touched Rs 45.

Has life changed since he quit CRISIL (where he was rating sectors like infrastructure, power, telecom, and oil & gas)? "It's just a shift from debt to equity," he laughs.

-Narendra Nathan

Jagdishwar Toppo
34/Analyst
RESEARCH HOUSE: Enam Securities
SECTORS: Cement, Metals

Jagdishwar Toppo spent the first decade of his professional life tracking the cement and metals sectors, so one would assume that he has his finger on the pulse of these industries (he has been with Enam since 1997; before that he was with Seamico Marlin Securities). Yet, Toppo, a Computer Science graduate from REC (Rourkela) and an MBA from IIM Calcutta, swears by hard fundamentals and depends only on cold numbers to throw up winners. It is, perhaps, natural to expect this in an organisation that believes in "zero-based research". "Thoroughness and depth are the critical ingredients for our research," he says. For example, he uses the price-to-capacity utilisation ratio analysis to arrive at the price levels that are expected to emerge. He also tries to identify the countries that are expected to drive any growth in demand. "This is because demand for these commodities is global," he contends.

Toppo has remarkable tenacity and conviction. He stuck to his "buy" recommendation on Grasim for a very long time (during the 2000-2002 period) when the stock refused to move above the Rs 240-360 band. Finally, though, his patience paid off. Grasim now trades at Rs 1,200 (on April 12, 2005). "It was a test of mettle for me," he says. "But if you have the conviction, you should stick to your call and it eventually comes right," he says. Toppo has taken other contrarian calls as well. When almost everyone else was negative about aluminium in 2003, he took a positive stand and recommended "buy" for Hindalco at Rs 641. He was spot on. The scrip closed at Rs 1,340 on April 12, 2005. Since commodity prices (and, consequently, share prices of companies dealing in them) move in cycles, he doesn't believe in a buy-buy strategy. He downgraded acc and Gujarat Ambuja from outperformer to neutral three months back. Why? "We are still bullish on the sector, but these stocks are fairly valued now," he says.

Almost cloning his balanced approach to stock picking, he tries to strike a balance between work and his personal life, though an interested bystander might feel that the scales are tilted in favour of the former. He spends most of his leisure hours with his family. He also enjoys travelling, listening to instrumental music and reading books on macro-economics and geo-politics by Jim Rogers, Marc Faber and others. "Since these are the major factors in the commodities market, I take every opportunity to learn more about them," he says. Leisure activity, did we say? But then, that's Toppo for you!

-Narendra Nathan

How We Did It

Our second best equity Analysts Survey brings out several interesting facts. But before that, a few words on the methodology. Like last year, the survey was conducted among equity fund managers of leading mutual funds (with minimum assets under management of Rs 1,000 crore) in India. This gave us a jury of 20 fund managers. We approached the chief investment officer (CIO) or the senior-most equity fund managers of these funds and asked them to nominate the five best equity analysts (across research houses and also across sectors). But, to get the real cream, we decided to raise the bar this time: we are featuring only those analysts with three or more recommendations (compared to two or more recommendations last year). That explains why the number of featured analysts fell to 10 this year compared to 20 last year.

Now, let us go back to the interesting stuff. First, there is a major churn among the star analysts. And only four analysts (Ajay Sharma, Manish Jain, Prabhat Awasthi and Sanjeev Prasad) were able to retain their positions on our list. This would have been true even if we had kept the same cut-off of two references as last year and featured all the 18 analysts cleared at this level. Secondly, the movement of star analysts is affecting the ratings of research houses as well. For example, new entrant Brics Securities has got 5 per cent of the recommendations only because a few star analysts joined it. Likewise, Deutsche Securities has moved up from 1 per cent last year to 4 per cent this year only because Manish Jain joined it from DSP Merrill Lynch (which slipped from 12 per cent to 7 per cent). But the most important point worth mentioning here is the emergence of SSKI Securities, a local research house, as the undisputed favourite among Indian fund managers, pushing several global research houses down the line.