Explanation of CRISIL Fundamental and Valuation (CFV) matrix
The CFV Matrix (CRISIL Fundamental and Valuation Matrix) addresses the two important analysis of an investment making process – Analysis of Fundamentals (addressed through Fundamental Grade) and Analysis of Returns (Valuation Grade)
Fundamental Grade CRISIL’s Fundamental Grade represents an overall assessment of the fundamentals of the company graded in relation to other listed equity securities in India. The grade facilitates easy comparison of fundamentals between companies, irrespective of the size or the industry they operate in. The grading factors in the following:
¾ Business Prospects: Business prospects factors in Industry prospects and company’s future financial performance ¾ Management Evaluation: Factors such as track record of the management, strategy are taken into consideration ¾ Corporate Governance: Assessment of adequacy of corporate governance structure and disclosure norms
The grade is assigned on a five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals)
CRISIL Fundamental Grade
5/5 4/5 3/5 2/5 1/5
Excellent fundamentals Superior fundamentals Good fundamentals Moderate fundamentals Poor fundamentals
Valuation Grade CRISIL’s Valuation Grade represents an assessment of the potential value in the company stock for an equity investor over a 12 month period. The grade is assigned on a five-point scale from grade 5 (indicating strong upside from the current market price (CMP)) to grade 1 (strong downside from the CMP).
CRISIL Valuation Grade
5/5 4/5 3/5 2/5 1/5
Strong upside (>25% from CMP) Upside (10-25% from CMP) Align (+-10% from CMP) Downside (negative 10-25% from CMP) Strong downside (<-25% from CMP)
Each member of the team involved in the preparation of the grading report, hereby affirms that there exists no conflict of interest that can bias the grading recommendation of the company.
Additional Disclosure This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT).
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