Our SME Fundamental Grading is an independent opinion on the fundamentals of an SME that is proposed to be listed on the SME Exchange. The grading is a relative assessment in relation to other SMEs in India. The assessment is based on a grading exercise carried out by industry specialists from CRISIL's Research division and comprises an analysis of the following:

• Business prospects
  • Industry prospects
    Assessment of attractiveness of the industry encompassing growth opportunities, degree of competition, regulatory risks and other parameters
  • Company prospects
    The alignment between industry opportunities, the company's strategy and its capabilities
• Financial prospects 
  A forward looking assessment of key financial indicators relevant for an equity investor.
  
• Management quality 
  An assessment of the ability of the management to scale up the business and handle uncertainty.
  
• Corporate governance 
  An evaluation of the company's governance architecture to determine if it is structured such that the risks and rewards of business are equally available to all shareholders.
   

Our  SME Fundamental Grading is CRISIL's current opinion on the fundamentals of the  graded issue. This opinion is a relative assessment in relation to other SMEs in India. CRISIL SME Fundamental Grading reflects its assessment of the graded company's equity fundamentals as distinct from an assessment of debt fundamentals. A CRISIL SME Fundamental Grade should not be construed to mean a comment on the price of the graded security nor is it a recommendation to invest or not to invest in the graded SME / instrument.

SME Fundamental Grading benefits investors and aids companies in fund raising

The SME Fundamental Grading is particularly useful for investors who are seeking to invest in SME companies and aids companies in fund raising. Our SME Fundamental Grading aids investors to identify fundamentally better SME companies, thereby helping them to make informed investment decisions. An investment decision involves three key components:

• Analysis of fundamentals
• Analysis of returns 
• Investor preference for the asset class

CRISIL SME Fundamental Grading aims to address the first component - analysis of fundamentals.

Grading list and rationales

SME Independent Equity Research (SME IER) offers an independent and unbiased assessment of a company's fundamentals and valuation. SME IER covers companies which are already listed on the SME Exchange. 

In contrast to traditional equity research models, CRISIL SME IER is carried out by an entity that does not have a transactional interest in the stock that is being researched. CRISIL SME IER also differs from conventional research in not making 'buy', 'hold', or 'sell' recommendations, and instead offers an opinion on the company's fundamentals and valuation. The advent of SME IER makes for a new paradigm in the Indian equity market, empowering individual investors to make better-informed investment decisions backed by high-quality research from India's leading research house.

Benefits of Equity Research

• Improved liquidity
  Consistent research, with detailed initiation reports and quarterly updates, increases liquidity and helps the company to trade at fair prices
• Easy access to capital 
  Generates awareness among investors and positions the company as a long-term prospect during fund-raising programmes
• Enhanced visibility
  Positions the company to domestic and international investors
• Eases management bandwidth
  Frees up the company's top management and investor relations team's bandwidth
• Increased transparency
  Creates an investor-friendly image for the company and raises transparency levels
  

The SME Independent Equity Research Reports we offer: