Indian Capital Markets have shown remarkable growth in the post-Liberalization era and it remains one of the most resilient globally and poised to be one of the Top destinations for domestic and global businesses to expand and invest in. Raising capital is a strategic priority across India and role of Capital Markets has assumed far greater importance and urgency.
India’s capital markets are currently valued at $140 billion, according to a report by McKinsey & Co. The consulting firm further states that India can unlock a further $100 billion in fresh funding each year for India Inc. if policymakers implement the right policies and fiscal measures to deepen the country’s capital market.
The size of the market can rise even further to $240 billion in a year’s time, but as it stands today, India’s ability to receive funding at scale is moderate at best with shallow pricing efficiency. In comparison, Australia and Japan rank much higher in funding. India needs policies to channel its substantial savings into productive endeavours and accelerate economic growth to potentially lift millions from poverty.
Emerging economies, including India, do not have access to predictable capital market funding at scale and investors lack the financial instruments to channelize long-term savings. This often leads to poor allocation resources pulling down growth prospects. The report suggested that deeper capital markets in emerging Asia could free up a cumulative $800 billion in funding annually, mostly for mid- to large-sized corporations and infrastructure.
The biggest challenge for India is to develop the corporate bond and securitization market, the report further iterates. Emerging market issuers lack options to diversify funding and to match funding with their needs. The absence of a long-dated bond market diminishes corporate borrowers’ flexibility to align funding structure with assets. The listing of government-controlled entities is a step in the right direction as it may lure investors to capital markets. Further, mandating state-controlled entities to tap debt capital for funds instead of going for bank loans is a step in the right direction as well.
Issues in emerging markets face a more volatile and higher cost of capital compared to developed economies. They pay roughly a 120 percentage point higher real cost for debt securities, making it difficult to raise funds for new ventures and to grow existing large companies or conglomerates.
Apart from more prudent fiscal policies and implementation measures by the Government of India, what this essentially is a change management challenge that requires a new mindset. Back in 2015, the US and Indian Governments were in serious talks to discuss potential avenues of technical collaboration between the Ministry of Finance and the US Department of Treasury in developing deeper and more robust Indian capital markets. In April 2017, the capital markets regulator SEBI introduced new products and stricter control measures to deepen the Indian capital markets. For instance, SEBI now allows investors to use e-wallets to buy mutual funds, which would potentially increase inflows into India’s Rs18 trillion MF markets. These are welcome moves indeed!
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The global economy is ever evolving, it’s good to be on top of your game, a step ahead of the others. If that is your goal, then to get a career boost in the field of finance, learning financial modelling is imperative. it will jumpstart your career in incredible ways. It is good to learn concepts and tools required to get an edge in the ultra-competitive job market. Financial modelling is one of the most sought-after skills in today’s corporate world where demand outnumbers supply.
What is Financial Modelling?
Financial modelling is nothing but an analysis of the company’s performance on applicable financial factors.
The intention of the analyst is to accurately forecast the capability in potential earning of an organisation.
There are various theories that exist, a financial analyst tests these theories by creating business events in an interactive format, mainly spreadsheets in excel, this is referred to as a financial model. It usually captures all variables for a particular event. After quantification of these events, formulas are created around these variables.
The spreadsheet is mainly in excel hence proficiency in it is required.
Financial models are mostly used by a financial analyst to understand the company’s performance and to predict its future. Being able to build a financial model is a prerequisite for jobs in investment banking, credit rating, risk management and so on.
One might be a business school graduate, one could also understand theoretically what financial modelling is, but it has been found that there a gap in learning of financial modelling and application. Most of the learning in B-schools is not relevant to latest developments, it is not detailed enough, and financial modelling is generally thought without excel practical experience. So if you are experienced, you might know what to do however would not know how to do it right, in the best technique. For example, you might know what is cash, debt paydown, ways a company can raise revenue. But what big companies really want you to know is how to determine the fair stock price of a company given all their financial statements.
Learn Financial Modelling the Right Way
When financial modelling is understood and applied correctly you will truly understand the fundamentals of the company, and your growth in corporate finance is vast. You will learn that ‘revenue’ is not just an item in the income statement but a combination of many aspects such as sales pipeline, probability of sales conversion, sales channel etc…, you will understand that market expense is combination of detailed data like, channel wise budget, conversion funnels, customer acquisition cost etc.,
In recent years financial modelling has become a predominant talent requirement for career advancement in finance. Most corporate finance roles require the knowledge of financial modelling, which translates that if you know financial modelling it also opens many career choices for you. The reason it is so multipurpose is that it assists in any job role that is involved in analysing a company. There are not many people who know how to build a financial model hence doing a specialised course will give you an advantage over others. A course will help you understand in detail on how to value a company, take a company IPO, issue shares, mergers and acquisitions, advise a company on options pricing or secondary sales, you will have a stronger foundation due to the understanding of financial modelling.
A financial modelling course is for anyone, someone who is pursuing an MBA, done their CA, CFA, or plan too, as it will add on to the theoretical learning in a practical way, and for working professionals as they will get an in-depth understanding and an edge over others, they will be able to contribute and spearhead financial modelling projects.
In recent times, it is not only good enough to simply deliver the past event results and explain what happened to the stakeholders. The explanation does not have any value if it cannot assist in making strategic decisions which will enable real value creation and the hence incremental increase in the valuation of the company and revenue.
Imarticus Learning has designed a Financial Modelling & Valuation Certification program for careers in Corporate Finance across various Financial Services roles like M&A, Private Equity, Equity Research, Business Modelling, Start-Ups, Budgeting, Financial Control and Financial Operations.
It helps to develop a fast-paced career path, which is both financially and professionally rewarding.
The global skill sets acquired through a career in financial services enables you to take on a variety of roles and leadership positions across large Corporates, Start-Ups, Investment Banks, Buy Side funds and new age e-commerce companies.
If you see yourself as a person working in the financial services industry, Financial Analyst should then be your chosen field, as it is one of the most revered titles in the finance industry.
A Financial Analyst is essentially a person who performs financial analysis at a micro and macro level to understand the health of an organisation and further give suitable recommendations. They also suggest a course of action, which would be something like recommendations on buying or selling a company stock based on its current and predicted strength. It is expected of the analyst to be aware of the current developments in the field in which he or she specialises, as well as having the ability to prepare financial models that predict future economic conditions across possible variables.
One of the key responsibility of the financial analyst is not only to manage financial data but also to summarise them through a presentation, reports and statistical analysis.
The financial analyst job is much like the financial planner; most times you would see a financial analyst is working very closely with the financial planner to come to some conclusions related to investment choices. Although it is important to note that the job of a financial analyst calls for a higher level of expertise. It is more holistic and demands certain specific skill sets.
Financial analysis is done in a structured manner which primarily covers fundamental analysis, ratio analysis, financial modelling and valuation.
We can divide the role of financial analyst into two parts, those who work on the Buy-Side and those who work on the Sell-Side. An analyst on the buy side works with companies that have money and need help with investment strategies. People on the sell side help the companies price and sell their products, these companies are usually investment banks and securities firm.
Research suggests the financial analyst job sector is predicted to grow by 15.5% in the decade spanning the year 2012-2022. That figure alone predicts close to 35000+ jobs in the US alone. A financial analyst can play many roles and execute multiple responsibilities. Investment analyst, money market analyst, mergers and acquisition analyst, budget analyst are but a few recommendations.
So how do you get started?
To begin with, if you have a majored in computer sciences, biology, physics or even engineering, you are already in the favourable pool. It is easier for people from these backgrounds to start at an entry level position. If you are an MBA graduate it would be possible that you start as a senior analyst. A degree in Business administration, accounting, finance or statistics gives a springboard to your growth within an organisation, although it is not a prerequisite to being an MBA to become a financial analyst.
To become a successful financial analyst one needs to be proficient in a wide variety of skill sets, they might include-
Financial modelling, it is a mirror that shows if an organisation is in need of additional funds, analysing and defining the risk level. Basically, it is a tool, an abstract model of a real world financial situation. There are various valuation and forecast theories that exist and the financial analyst is able to recreate events in an interactive calculator referred to as a financial model. Accounting skills, the flexibility with numbers is a prerequisite. Knowledge about the equity research goes hand in hand to create an entire package. But most importantly the ability to connect with people, to be able to translate your financial finding in the right way, through the right tools is also a must. Being fluent in your soft skills does not only mean the ability to communicate, but also the ability to use excel and PowerPoint to your advantage.
If you are a beginning or an MBA graduate or a major from any field, there are many certified institutions which offer comprehensive courses that help you acquire a detailed understanding of the role and also provide with experiential learning methodologies in close association with the industry experts, thus giving you the backing required to excel in your chosen field. They also help you with placements as they are well connected with firms who have need of such professionals.
A career in financial analyst offers financial security, it also gives you the opportunity to help in shaping the finance industry.
So if this interests you, then it is recommended to get the required skill sets and get started.
Imarticus Learning is India’s leading professional education institute, offering certified industry-endorsed training in Financial Services, Investment Banking, Business Analysis, IT, Business Analytics & Wealth Management.
Imarticus Learning is offering the Financial Analysis Prodegree, in association with EY as the Knowledge Provider, It is a skill-building programme covering accounting, financial modelling, business valuation and equity research.
Through the programme, the participants gain knowledge which helps them to build a career across a wide variety of roles in corporate finance and investment banking.
The Imarticus Learning Career Services and Placements team provides you guidance and assistance throughout the program, giving you the best career opportunities in leading international firms.
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It may seem that there has been a certain disequilibrium set to motion in the sphere of financial services in general and Investment Banks in specific. While although a new year is bound to bring about new and encouraging changes, it seems to have dimmed those aforementioned possibilities for the world of Investment.
It all began with the “Waterline Project”, which is considered to be a cost cutting initiative of Nomura. The CEO, Koji Nagai Nagai, gave out a statement saying, “The waterline on a warship will rise a centimeter each year if the crew brings excess baggage. Before you know it, the ship would sink.” It has been announced that Nomura will begin ‘trimming’ the staff, which it proposed to do by cutting about 900 heads, beginning April 2016. The said cost cutting has a focus on getting more and more out of the existing employees, in terms of productivity. It would involve overseeing the work passed on to subordinates, by their heads. While on the other hand, the relevance and importance of certain tasks and reports will also be reviewed. Nagai was of the opinion that, “to be honest, this company can do so much to control costs. There will be resistance.”
Another investment banking firm, Credit Suisse, has seemingly taken a similar route. It has already slashed down about 1800 London heads, in the year 2016. According to a report by Financial News, it has reportedly asked all of its employees, that they must pay for their own mobile phones. It is believed that Credit Suisse is bound to cut CHF4.3 billion by the year 2018 and in this process, it seems every little bit helps. Many believed that this year would have things looking in the positive, mainly owing to a couple of good quarters, but it so happens that disappointment is the order of the day. The silver lining here possibly seems to be the fact that 2016 saw fewer job cuts as compared to any other year. Investment pundits believe that banks are on their way to use technology, in order to chip away at the trading floor. It may seem that the glory days are probably breathing their last.
Daniel Pinto, the CEO of JP Morgan’s Investment Bank, stated that he believes they are down by 1% on 2015. The fixed income revenues, which have been tumbling for quite some time now, have seemingly found their base, this past year. Banking Corporations have already begun to allocate lesser resources and staff to their investment banks. This is a telling sign that any rebound in the revenues, is bound to have far less impact on the overall picture, as compared to what it used to in the year 2007.
Meanwhile, the other news snippets on the Investment Bank front include, the surprising fact that Jamie Dimon, happened to be the only bank CEO to buy company stock in 2016. Hedge Fund paychecks have a stark contrast when it comes to paying their Data Scientists as opposed to their Portfolio Managers. While on the bright side, Mergers and Acquisitions are bound to boom this year, especially with Goldman Sachs topping the M&A league this year.
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It seems that the sector of financial technology, which was touted as many as the new kid on the block, has had a fair share of failures. Some of the big guns in this field including OnDeck and Lending Club have reportedly experienced some mighty losses and organisations like CAN Capital stopped lending altogether. There seem to be a lot of experts and industry pundits, who are all of the collective opinion that “the bloom is finally coming off the rose.” This happens to be a figurative telling of the certain bumps and losses incurred by this field. But a majority are still siding with the silver lining and it may seem that this sector might really be thriving. The recent events are not news for the FinTech industry, which is because every single industry undergoes them. Regardless of whichever sector it is, the market leaders usually happen to jump to an advantage.
But a majority are still siding with the silver lining and it may seem that this sector might really be thriving. The recent events are not news for the FinTech industry, which is because every single industry undergoes them. Regardless of whichever sector it is, the market leaders usually happen to jump to an advantage, thus leading to the growth of the industry. Now, that the industry grows, it also multiplies the number of players entering into
the market space. Some players happen to participate in the distinct competition as their ventures grow and as is the case, some players cannot really make it. It’s the most basic rules of capitalism, where although all entrepreneurs take risks, some may succeed while other may miss the mark.
FinTech is most likely thriving mainly because it happened to extend its capital access, to almost everyone. Per say, there were no discriminations whatsoever as minorities, women, immigrants and all the others who were under served, were provided with a level playing field by technology. This could not have been a plausible scenario a few decades ago when one could meet a venture capitalist at a cocktail party and get themselves a six figure financing deal. While people who were natives and higher up on the societal runs totally got to benefit from this, those of lesser economic means always struck out.
But today with technology advancing, lenders are able to have accurate data about their potential borrowers. This way the risk factor goes really down and efficiency increases. Similarly, FinTech has begun to take India by storm, by revolutionizing the electronics payment industry. It cannot be denied that banks are slow when adapting to change which is why it takes a while for FinTech companies to break into the market. But another thing working in favour of this sector is that the investors have short-term goals, thereby they’d want to quicken the process of things while expecting quarterly results.
But most important of all, we cannot overlook the fact that technology has transformed the banking sector thoroughly. Today it is actually possible for a person to never step inside a bank to carry on their personal transactions. We happen to live in a time where you can actually accomplish everything at the click of a button. With large banking corporations investing in technology to make most of their application processes to go online, there is a sure chance of FinTech not only thriving, but becoming a flourishing business. Many finance aspirants have noticed this and have begun to learn the ropes by taking up training programs, offered by professional training institutes like Imarticus Learning.
Imarticus Learning teams up with leading Global FinTech players to bring to you a first-of-its-kind Global FinTech Symposium. FinTech, or simply put, Financial Technology, is an industry composed of start-ups and established companies trying to replace or disrupt traditional financial processes with the use of technology.
This is an upcoming industry and has the potential to impact every single person and therefore makes it one of the fastest growing areas for venture capitalists. We welcome you to join this FinTech consortium where our panelists from global organizations will share their journey and experience on what it takes to excel in the world of FinTech.
By Zenobia Sethna
Non-banking finance companies (NBFCs) have scripted a fantastic success story so far in India. Leading NBFCs are bigger than many Public Sector Banks.
Types of NBFCs:
Factors contributing to the growth of NBFCs:
• Stress on public sector units (PSUs)
• Dormant credit demand
• Digital disruption, especially for micro, small and medium enterprises (MSMEs) and small and medium enterprises (SMEs)
• Uptick in consumption
• Superior distribution reach and sectors where traditional banks do not lend
• NBFCs on both individual and collective basis need to build an open ecosystem for capacity building.
• To keep up with the growth trajectory in the face of heightened regulations, it is the quality of its staff which will determine the health of the sector.
Imarticus Learning offers a comprehensive range of professional Financial Services and Analytics programs that are designed to cater to an aspiring group of professionals who want a tailored program on making them career ready. Our programs are driven by a constant need to be job relevant and stimulating, taking into consideration the dynamic nature of the Financial Services and Analytics market, and are taught by world class professionals with specific domain expertise.
A financial market unlike the other markets, is more of an intangible concept and basically refers to a marketplace where buyers and sellers usually participate in an exchange of assets such as, equities, bonds, derivatives and currencies. The basic characteristic of any financial market comprise of transparent pricing, basic regulations regarding costs and fees and a number of market forces, that determine the prices of securities that trade. These financial markets can be found almost in every single country across the world, some of these may be small, with a very few number of participants, while some are huge in terms of the amount of money they trade, for example the New York Stock Exchange.
It is basically investors, who have an access to a great number of financial markets and exchanges, that deal with a vast array of financial products. Some of these markets have always been open to private investors, while some have always remained, pretty much exclusive in terms of catering to major international banks and financial professionals. There are a variety of financial markets, which make up the field of finance.
These markets are where individuals and various organizations, deal with the trading of financial securities. There are a number of organizations and companies, that sell securities on these markets, in order to raise funds for themselves. This is why the capital markets consist of both primary as well as secondary markets. Any organization or corporation, requires capital in order to finance its various operations, as well as to engage in long term investments. In order to accomplish this, the corporation raises money through the sale of securities, basically bonds and stocks; all of which is in the name of the company.
These are markets, which allow all of the investors to buy and sell the shares in publicly traded companies. They are popularly known to be the most vital area of a market economy, this is because they provide companies, with the access to capital and all the investors, with a chance to have a percentage of ownership in the company. This market is divided into primary markets as well as secondary markets.
A bond refers to any debt investment in which, an investor loans money to an entity, this can be either corporate or governmental. This entity basically borrows the funds for a specific period of time Bonds are usually used by a number of companies, municipalities, states as well as governments, in order to finance a variety of projects and activities. This markets basically deals with buying and selling of bonds on the various credit markets, all over the world. This market is also referred to as the debt market or credit market or fixed-income market. The many types of bonds are corporate bonds, municipal bonds, notes and bills which are also known as treasuries and so on.
All of these markets require a financial professional, wither a corporate banker, an investment bankers or portfolio manager and so on, to deal with their various aspects. The various attractive benefits that these markets offer, are a result of a lot of finance aspirants seeking positions in the field of financial markets. Imarticus Learning is one of the best institute for finance and investment banking training and very much preferred by these professionals, in order to get a hang of how the markets work, through various certification courses in corporate finance, investment banking and so on.
by Reshma Krishnan
One of the most common questions we get asked by MBA students is, ‘Why should I do this course? I have learnt everything I need to in my MBA.’ This is when I tell them about Amal Kothari. Amal did his MBA at Kellogg Business School, currently ranked number three in America and the best part time MBA school in the world. Yet, he still came to us to learn how to model. But he went to Kellogg you say! Why did he need a short-term course in Financial Modelling?. Because they don’t teach you how to do something at MBA school. They teach you the theory and cases where you apply the theory, but they expect you to solve most of the problems by yourself. So if you’re doing something like Financial Analysis or Corporate Strategy, they expect you to learn how to model out a problem and support your analysis. But they don’t teach you HOW to do it. Why? Because there is no time. An MBA, as it’s name suggests is a general study in administration. While they do let you specialize in something and some schools have focus areas they are known for, like Wharton for Finance and Kellogg for Marketing, the first half of your study is a general introduction to Economics, Accounting, Marketing, Business, Corporate Finance, logistics and Strategy. The second half is specialization, where you hone your understanding and get a deeper understanding of your subject. So why does a short course after help? Here are some reasons-
• Curriculum focused on concepts not skills – if you check every elective or course list of an MBA school, you will see Corporate Finance and Portfolio Management. You will not see Financial Modelling or Excel for Financial modeling. Why? Because Financial Modelling is a skill set they either expect you to have, or develop when you do the assignments. No one in MBA school is going to teach you how to use V look up or create spinners in a model. That’s because.
• Time: For most part each one lecture is devoted to a concept like Time Value of money or Relative Valuation. In fact, it’s not even as specific as that. I don’t even recall studying valuation the way I teach it at our FMVC course because again, MBA’s are not specific. They are general and focus on conceptual understanding and applying concepts to real life. They focus on analysis, not on skill building, because there is no time.
• Hand holding- Short Term courses, while short are intense in that they focus on specific skills. For instance, in MBA school you will spend half an hour on Forecasting. In a short term course, you will spend 5 hours learning how to forecast, then be shown how to do it in an excel document, and then have someone supervise you As you do it. This ensures learning and makes you attractive in the job market.
MBA’s and Short Term courses are not mutually exclusive. In fact, if anything, they work well together. The first ensures you have a broad knowledge of everything related to business administration while the latter ensures you have a thorough understanding of your specialization, be it SAS or Financial Modelling. Both add value to the resume and the combination makes you stand out from the crowd because the short term course makes you Job Ready.
A CFA analyst or any professional with the prestigious certification, is responsible for looking after the financial matters of their clients and their company. In the recent times, this certification has garnered a lot of importance and by extension, a lot of finance aspirants contemplate a career here. When it comes to CFA, the more information you gather, the better for you. One of the important things, that a finance aspirant looks for after knowing the eligibility criteria and the educational requirements, is how much salary does this field offer. So here’s a detailed breakdown of the various salary trends, offered in the different roles as a CFA charter holder.
It has already been established that this CFA offers a number of career options as far as the job profile is concerned. The salaries for these jobs differ by a tiny margin. If you are a Financial Analyst your salary will be anything between $40,801- $ 95,414 while other job options like Investment Analyst will have $44347-$117,280 as their annual salaries. Here, the professionals who draw in the most salary are the Portfolio Managers, with their annual salary going up $162,747. Whereas a Chief Financial Officer would draw a salary around $145,810 and on the other hand someone, who is the Vice President of Finance would draw around $131,700 annually. The CFA certification has global recognition, which is why the salaries are mentioned in the denominations of USD.
Just like in any other field, the salaries differ on the basis of the experience, a certain candidate has. While, the starting salary for a fresher, is anything around $51,050, for a professional with more than 20 years of experience, it can go up to $147,260. Earlier, it was only those firms who provided financial services, that needed a CFA analyst. But today, with the change in times, finance has come to the epicenter of all industries, which is why every firm is on the lookout for the services of a CFA Analyst.
The various companies that look to hire CFA Analysts, range from Contractors, State & Local Governments, Foundations, Hospitals, Private Practices, Companies, Franchises and many others. The salaries would also differ in terms of the variety of employers and the nature of the work. While Contractors offer around $50,400 annually, Franchises and other organizations usually offer the most, over $10000 annually. Just like the nature of the firm, its size also matters quite a lot, when it comes to deciding the salaries of their employees. If you are working for a firm with less than 600 employees, the salaries range from $100,980 annually, and if you work in a larger spectrum, it can be anything around $101,940, provided you are a seasoned CFA analyst. Another deciding factor is the company sales of every firm, this basically means that, if your company has greater revenue, you’d be paid big bucks as well. Companies which have a revenue of less than $500,000 in sales, usually pay around $70,468 whereas, those with an annual turnover of around $2 billion, pay their employees anything around $104,000.
These sparkling salary trends and the nature of the job, has attracted a lot of takers. As the CFA exam is considered to be really tough to crack, a lot of candidates look for the perfect institute to train them. Imarticus Learning is one such institute that have CFA Level 1 programs. They are a preferred institute because of the unique mentorship it offers to each student.
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We have often heard of Leverage in various Financial contexts such as a Leveraged Buyout, Leverage ratio of a Hedge fund etc. What does it mean?
Lets get to Physics first, for it is more common-sensical and straightforward
We define Torque as the radios vector multiplied by the force vector.
This finds application in as mundane a thing as opening a door.
The force we apply is of course the FORCE =F and the distance between the knob and the axis about which the door rotates is the RADIUS =R.
Imagine for a moment if the knob were to be fixed or engineered to be operated from the middle of the door instead of the end as we conventionally have it. This would mean that we would require more force for the same output. The output here being the door being opened. Say 45 degrees.
In the Financial scheme of things, the force that we apply is the monetary effort coming from ownership.i.e, say equity. The inherent radius is analogous to the inherent effortlessness involved of not having to ‘own’ or in other words, not having to raise equity but debt. The torque here could be considered as the revenue/profit/return
This situation of having more debt than equity is akin to having more radius and the knob of the door hence being attached to the end of the door. This makes the door opening rather relatively effortless.Or gaining profit effortlessly or by leverage.
So does that mean that a high leverage or debt is always the go-to choice of investment? I am afraid NOT necessarily.
Imagine the flip side of the door story. If someone were to have kept the hand at the edge of the door, while it is being closed .A given amount of force (equity) will definitely do more harm to the innocent hand when the radius is more (debt) than it would if the radius were less due to the door knob located unconventionally in the middle.
Needless to say financially it could go as far as saying “He burnt his fingers venturing into the business”!
Imarticus Learning offers short term courses in finance that not only train students to become investment bankers, or learn to manage their own finances via wealth management courses. Imarticus Learning is a leading industry expert trainer in financial services.
Author Bio :
Kumar Simha is an NIT Graduate with an MBA, Finance from HULT, Boston, USA, Kumar has more than 8 years of experience across Financial services, Business management and Training.
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