Module 3
Industry Analysis – Building Sector-Level Conviction
Free Video
10–15 minutes
Presented by
SEBI Registered Research Analyst
Why Industry Analysis Matters ?
Before selecting a stock, ask:
Is the sector growing or shrinking?
01
Is demand structural or cyclical?
02
Are margins sustainable?
03
Key Message:
Even a good company struggles in a weak industry.
Sector selection often determines investment success.
Industry Life Cycle
Examples:
RA Insight: Margins, competition, and valuations vary by life cycle stage.
Every industry passes through phases:
Introduction
Growth
Maturity
Decline
Porter’s Five Forces Framework
A structured way to evaluate industry competitiveness:
Threat of new entrants
01
Bargaining power of suppliers
02
Bargaining power of buyers
03
Key Message:
Higher competition → Lower pricing power → Lower margins
Threat of substitutes
04
Competitive rivalry
05
Demand–Supply & Pricing Power
A structured way to evaluate industry competitiveness:
Demand growth trends
Capacity expansion
Cost structures
Raw material dependency
Example:
Pricing power defines profitability stability.
Cyclical vs Defensive Sectors
Cyclical Sectors
Performance depends on economic cycles.
Defensive Sectors
More stable earnings during downturns.
RA Insight:
Sector allocation depends on macro outlook.
Government
Boost industries (PLI schemes, tax benefits)
Regulatory risk is a major factor in sectors like:
Restrict industries (compliance costs, bans)
Change profitability structures
Policies can:
Policy awareness is critical for analysts.
Regulatory Impact on Industries
Key Takeaways & What’s Next
After this module, you should be able to:
Identify industry growth phase
Next Module:
Company Analysis – Business & Governance
Assess competitive intensity
Distinguish cyclical vs defensive sectors
Understand regulatory impact
Right sector → Then right company
01
03
02
04
Thank You