{"id":25015,"date":"2022-06-01T07:43:58","date_gmt":"2022-06-01T07:43:58","guid":{"rendered":"https:\/\/www.5paisa.com\/finschool\/?post_type=markets&#038;p=25015"},"modified":"2024-08-02T21:47:42","modified_gmt":"2024-08-02T16:17:42","slug":"industry-analysis","status":"publish","type":"markets","link":"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/industry-analysis\/","title":{"rendered":"Learn About Industry Analysis From Stock Market Course"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"25015\" class=\"elementor elementor-25015\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-b5fdef2 elementor-section-full_width tab_container elementor-section-height-default elementor-section-height-default\" data-id=\"b5fdef2\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div 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data-widget_type=\"shortcode.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-shortcode\">\t<script>\n\t\tjQuery(document).ready(function(){\n\t\t\tjQuery(\"#post_chapters a[href*='\" + location.pathname + \"']\").addClass(\"current\");\n\t\t})\n\t<\/script>\n\t<div class=\"desktop_chapters\"><div id=\"post_chapters\"><div class=\"post_chapters-heading\">Chapters<\/div><ul><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/stock-market-investments\/\">Stock Market & Investments<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/risk-in-stock-market\/\">Risk In Stock Market<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/measurement-of-risk\/\">Measurement of Risk<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/risk-expected-return\/\">Risk & Expected Return<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/risk-return-relationship\/\">Risk & Return Relationship<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/market-analysis-its-impact-on-prices\/\">Market Analysis & Its Impact On Prices<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/industry-analysis\/\">Industry Analysis<\/a><\/li><li><i class=\"fa 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class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-cb8a7b0 market_content_tabs elementor-widget elementor-widget-eael-adv-tabs\" data-id=\"cb8a7b0\" data-element_type=\"widget\" data-widget_type=\"eael-adv-tabs.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t        <div data-scroll-on-click=\"no\" data-scroll-speed=\"300\" id=\"eael-advance-tabs-cb8a7b0\" class=\"eael-advance-tabs eael-tabs-horizontal eael-tab-auto-active \" data-tabid=\"cb8a7b0\">\n            <div class=\"eael-tabs-nav \">\n                <ul class=\"eael-tab-inline-icon\" role=\"tablist\">\n                                            <li id=\"study\" class=\"active-default eael-tab-item-trigger eael-tab-nav-item\" aria-selected=\"true\" data-tab=\"1\" role=\"tab\" tabindex=\"0\" aria-controls=\"study-tab\" aria-expanded=\"false\">\n                            \n                                                                <i class=\"far fa-edit\"><\/i>                                                            \n                                                            <span class=\"eael-tab-title title-after-icon\" >Study<\/span>                            \n                                                    <\/li>\n                                            <li id=\"slides\" class=\" eael-tab-item-trigger eael-tab-nav-item\" aria-selected=\"false\" data-tab=\"2\" role=\"tab\" tabindex=\"-1\" aria-controls=\"slides-tab\" aria-expanded=\"false\">\n                            \n                                                                <i class=\"fas fa-book-open\"><\/i>                                                            \n                                                            <span class=\"eael-tab-title title-after-icon\" >Slides<\/span>                            \n                                                    <\/li>\n                                            <li id=\"videos\" class=\" eael-tab-item-trigger eael-tab-nav-item\" aria-selected=\"false\" data-tab=\"3\" role=\"tab\" tabindex=\"-1\" aria-controls=\"videos-tab\" aria-expanded=\"false\">\n                            \n                                                                <i class=\"far fa-eye\"><\/i>                                                            \n                                                            <span class=\"eael-tab-title title-after-icon\" >Videos<\/span>                            \n                                                    <\/li>\n                    \n                                  <\/ul>\n            <\/div>\n            \n            <div class=\"eael-tabs-content\">\n\t\t        \n                    <div id=\"study-tab\" class=\"clearfix eael-tab-content-item active-default\" data-title-link=\"study-tab\">\n\t\t\t\t        <p><div class='white' style='background:rgb(255, 255, 255); border:solid 0px rgb(255, 255, 255); border-radius:0px; padding:0px 0px 0px 1px;'>\n<div id='text_slider' class='owl-carousel sa_owl_theme owl-pagination-true' data-slider-id='text_slider' style='visibility: visible;visibility:visible;'>\n<div id='text_slider_slide01' class='sa_hover_container' data-hash='Process-of-Industry-Analysis' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:400px; '><h2 style=\"text-align: left\"><strong>7.1 Process of Industry Analysis<\/strong><\/h2>\r\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-77241 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Process-of-Industry-Analysis.png\" alt=\"Process of Industry Analysis\" width=\"1853\" height=\"1933\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Process-of-Industry-Analysis.png 1853w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Process-of-Industry-Analysis-288x300.png 288w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Process-of-Industry-Analysis-982x1024.png 982w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Process-of-Industry-Analysis-768x801.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Process-of-Industry-Analysis-1472x1536.png 1472w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Process-of-Industry-Analysis-48x50.png 48w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Process-of-Industry-Analysis-96x100.png 96w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Process-of-Industry-Analysis-150x156.png 150w\" sizes=\"(max-width: 1853px) 100vw, 1853px\" \/><\/p>\r\n<p>The process of analyzing an industry is similar to examining the overall economy. It begins with a macro-level study\u00a0to understand how the industry interacts with the business cycle and which economic forces drive its performance. This broader view provides the foundation for more precise micro-level valuation, where tools such as discounted cash flow models, relative valuation, and dividend discount models can be applied effectively.<\/p>\r\n<p>By conducting macroanalysis first, investors can estimate key valuation inputs \u2014 such as the discount rate\u00a0and the expected growth rate of earnings and cash flows\u00a0\u2014 with greater accuracy.<\/p>\r\n<h3><strong><b>Key Areas of Macroanalysis<\/b><\/strong><\/h3>\r\n<p><b><\/b><strong><b>Business Cycle and Industry Sensitivity<\/b><\/strong><\/p>\r\n<ul>\r\n<li>Different industries respond differently to phases of the business cycle.<\/li>\r\n<li>For example, automobile companies like Maruti Suzuki tend to perform well during expansions when consumer demand rises, while FMCG firms like Nestl\u00e9 India\u00a0show resilience even during downturns because of steady demand for essentials.<\/li>\r\n<\/ul>\r\n<p><b><\/b><strong><b>Structural Economic Shifts<\/b><\/strong><\/p>\r\n<ul>\r\n<li>Long-term changes in the economy can alter industry prospects.<\/li>\r\n<li>For instance, the push toward renewable energy has boosted companies in the solar and wind sectors, while traditional coal-based industries face declining relevance.<\/li>\r\n<\/ul>\r\n<p><b><\/b><strong><b>Industry Life Cycle Evaluation<\/b><\/strong><\/p>\r\n<ul>\r\n<li>Industries move through stages: introduction, growth, maturity, and decline.<\/li>\r\n<li>The Indian e-commerce sector (Flipkart, Amazon India) is still in the growth stage, while textile manufacturing is closer to maturity, with slower expansion.<\/li>\r\n<\/ul>\r\n<p><b><\/b><strong><b>Competitive Environment Analysis<\/b><\/strong><\/p>\r\n<ul>\r\n<li>Assessing rivalry, barriers to entry, supplier power, and customer bargaining strength helps determine profitability.<\/li>\r\n<li>For example, telecom players like Jio, Airtel, and Vodafone Idea operate in a highly competitive environment, which impacts pricing strategies and margins.<\/li>\r\n<\/ul><\/div>\n<div id='text_slider_slide02' class='sa_hover_container' data-hash='The-Business-Cycle-And-Industry-Sectors' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:400px; '><h2 style=\"text-align: left\"><strong>7.2. The Business Cycle and Industry Sector<\/strong><\/h2>\r\n<p><img decoding=\"async\" class=\"aligncenter wp-image-77242 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Business-Cycle.png\" alt=\"The Business Cycle\" width=\"2000\" height=\"2000\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Business-Cycle.png 2000w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Business-Cycle-300x300.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Business-Cycle-1024x1024.png 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Business-Cycle-150x150.png 150w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Business-Cycle-768x768.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Business-Cycle-1536x1536.png 1536w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Business-Cycle-50x50.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Business-Cycle-100x100.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Business-Cycle-96x96.png 96w\" sizes=\"(max-width: 2000px) 100vw, 2000px\" \/><\/p>\r\n<p><strong><b>Broader Business Environment Influences<\/b><\/strong><\/p>\r\n<p>Industry performance is shaped not only by the economy but also by other external forces such as demographics, lifestyle changes, technology, and political\/regulatory developments. These factors can significantly alter both the cash flow potential and the risk profile of industries.<\/p>\r\n<ol>\r\n<li><strong><b> Demographic Trends<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>Demographics go beyond population size and age distribution \u2014 they include geographic concentration, income levels, and cultural diversity.<\/p>\r\n<ul>\r\n<li>India: With a large proportion of its population under 35, India has seen rising demand for consumer goods, housing, and digital services. For example, the surge in young professionals has boosted demand for affordable housing projects in cities like Pune and Bengaluru.<\/li>\r\n<li>Japan: In contrast, Japan\u2019s aging population has increased demand for healthcare services, retirement homes, and pharmaceuticals, while reducing demand for fast fashion and youth-oriented products.<\/li>\r\n<li>Income Distribution: Rising middle-class incomes in India have expanded markets for premium products such as smartphones (Samsung, Apple) and branded apparel.<\/li>\r\n<\/ul>\r\n<ol start=\"2\">\r\n<li><strong>Lifestyle Shifts<\/strong><\/li>\r\n<\/ol>\r\n<p>Lifestyle changes influence how people consume, work, and spend leisure time.<\/p>\r\n<ul>\r\n<li>The rise of dual-income households in urban India has increased demand for convenience foods, online shopping, and childcare services.<\/li>\r\n<li>Remote work adoption post-2020 has boosted demand for laptops, broadband services, and home office furniture, while reducing demand for commercial real estate in some regions.<\/li>\r\n<li>Global consumer preferences: Indian brands like FabIndia and Ayurveda-based products have gained popularity overseas, benefiting from perceptions of authenticity and wellness.<\/li>\r\n<\/ul>\r\n<ol start=\"3\">\r\n<li><strong>Technological Innovations<\/strong><\/li>\r\n<\/ol>\r\n<p>Technology reshapes industries by changing production methods, delivery systems, and consumer experiences.<\/p>\r\n<ul>\r\n<li>Automobiles: Electric vehicles (EVs) are replacing traditional combustion engines, creating opportunities for companies like Tata Motors and BYD while reducing demand for oil refiners.<\/li>\r\n<li>Retail: E-commerce platforms (Flipkart, Amazon India) use AI-driven recommendation engines and digital payment systems to personalize shopping experiences.<\/li>\r\n<li>Manufacturing: Robotics and 3D printing are transforming production efficiency, reducing costs, and altering supply chains.<\/li>\r\n<li>Energy: Rooftop solar panels and battery storage systems allow households and factories to generate their own electricity, reducing dependence on traditional utilities.<\/li>\r\n<\/ul>\r\n<ol start=\"4\">\r\n<li><strong>Political and Regulatory Environment<\/strong><\/li>\r\n<\/ol>\r\n<p>Government policies and regulations often reflect social priorities and can reshape industry dynamics.<\/p>\r\n<ul>\r\n<li>India: The introduction of GST streamlined taxation but required industries to overhaul compliance systems.<\/li>\r\n<li>Global Trade: Tariffs on steel imports in the US affected Indian steel exporters like JSW Steel, while free trade agreements boosted IT service exports.<\/li>\r\n<li>Environmental Regulations: Stricter emission norms have accelerated the shift toward EVs and renewable energy, impacting automobile and power industries.<\/li>\r\n<li>Financial Services: Regulatory changes such as tighter KYC norms and digital banking guidelines have reshaped how banks and fintech firms operate.<\/li>\r\n<\/ul>\r\n<p><strong><b>Economic Activity and Security Markets<\/b><\/strong><\/p>\r\n<p>When studying business cycles, economists often classify economic indicators into three categories: leading, coincident, and lagging. Leading indicators move ahead of the economy, coincident indicators move in line with it, and lagging indicators follow after changes have already occurred.<\/p>\r\n<p>Extensive research has shown that stock prices function as one of the most reliable leading indicators. This is because equity markets tend to anticipate changes in the economy before they are visible in GDP, employment, or industrial production data.<\/p>\r\n<p><strong><b>Why Stock Prices Lead the Economy<\/b><\/strong><\/p>\r\n<p>There are two main explanations for this forward-looking behavior:<\/p>\r\n<p><strong><b>Expectations of Future Performance<\/b><\/strong><\/p>\r\n<ul>\r\n<li>Share prices incorporate investor forecasts of earnings, dividends, and financing costs.<\/li>\r\n<li>For example, if investors expect companies like Infosys or HDFC Bank\u00a0to report stronger profits due to rising demand for IT services or credit growth, their stock prices will adjust immediately, even before the improvement shows up in official economic statistics.<\/li>\r\n<li>This makes equity valuations a reflection of future economic activity, not just current conditions.<\/li>\r\n<\/ul>\r\n<p><strong><b>Reaction to Other Leading Indicators<\/b><\/strong><\/p>\r\n<ul>\r\n<li>The stock market responds quickly to changes in variables such as corporate profit margins, interest rates, and liquidity conditions.<\/li>\r\n<li>For instance, if the Reserve Bank of India increases money supply through accommodative policy, sectors like real estate or automobiles may rally in anticipation of stronger demand.<\/li>\r\n<li>Similarly, when corporate earnings growth accelerates, investors revalue stocks upward, reinforcing their role as a leading indicator.<\/li>\r\n<\/ul>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p><\/div>\n<div id='text_slider_slide03' class='sa_hover_container' data-hash='Structural-Economic-Changes-And-Alternative-Industries' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:400px; '><h2 style=\"text-align: left\"><strong>7.3. Structural Economic Changes and Alternative Industries<\/strong><\/h2>\r\n<p>&nbsp;<\/p>\r\n<h3 style=\"text-align: left\"><strong><span style=\"color: #f1566d\"><img decoding=\"async\" class=\"aligncenter wp-image-77243 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Structural-Economic-Changes.png\" alt=\"Structural Economic Changes\" width=\"2000\" height=\"2000\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Structural-Economic-Changes.png 2000w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Structural-Economic-Changes-300x300.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Structural-Economic-Changes-1024x1024.png 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Structural-Economic-Changes-150x150.png 150w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Structural-Economic-Changes-768x768.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Structural-Economic-Changes-1536x1536.png 1536w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Structural-Economic-Changes-50x50.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Structural-Economic-Changes-100x100.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Structural-Economic-Changes-96x96.png 96w\" sizes=\"(max-width: 2000px) 100vw, 2000px\" \/><br \/><\/span><\/strong><\/h3>\r\n<p>Industry performance is shaped not only by the economy but also by broader forces such as <strong><b>demographics, lifestyle shifts, technological innovation, and political\/regulatory changes<\/b><\/strong>. These factors can significantly alter both the growth prospects and risk profile of industries.<\/p>\r\n<ol>\r\n<li><strong><b> Demographic Shifts<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>Demographics influence consumption, labor supply, and savings behavior.<\/p>\r\n<ul>\r\n<li><b><\/b><strong><b>India<\/b><\/strong>: With nearly two thirds of the population under 35, demand for digital services, affordable housing, and consumer goods has surged. The rise of Tier2 and Tier3 cities as consumption hubs has reshaped advertising and retail strategies.<\/li>\r\n<li><b><\/b><strong><b>Europe<\/b><\/strong>: Aging populations in countries like Germany and Italy have boosted healthcare, pharmaceuticals, and retirement services, while reducing demand for fast fashion and youth oriented products.<\/li>\r\n<li><b><\/b><strong><b>Income Distribution<\/b><\/strong>: The expanding middle class in India has driven growth in premium categories such as smartphones, branded apparel, and financial services.<\/li>\r\n<\/ul>\r\n<ol start=\"2\">\r\n<li><strong><b> Lifestyle Changes<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>Lifestyle trends affect how people live, work, and consume.<\/p>\r\n<ul>\r\n<li><b><\/b><strong><b>Remote Work<\/b><\/strong>: Postpandemic adoption of hybrid work has increased demand for laptops, broadband, ergonomic furniture, and coworking spaces, while reducing demand for traditional office real estate.<\/li>\r\n<li><b><\/b><strong><b>Urbanization &amp; Family Structures<\/b><\/strong>: Rising dualincome households in metros have boosted demand for convenience foods, online shopping, and childcare services.<\/li>\r\n<li><b><\/b><strong><b>Global Consumer Preferences<\/b><\/strong>: Indian wellness brands such as Patanjali and Ayurvedabased products have gained traction overseas, benefiting from perceptions of authenticity and natural quality.<\/li>\r\n<\/ul>\r\n<ol start=\"3\">\r\n<li><strong><b> Technological Innovation<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>Technology transforms industries by altering production, delivery, and consumer engagement.<\/p>\r\n<ul>\r\n<li><b><\/b><strong><b>Automobiles<\/b><\/strong>: Electric vehicles (EVs) from Tata Motors and BYD are replacing combustion engines, reshaping supply chains and reducing oil demand.<\/li>\r\n<li><b><\/b><strong><b>Retail<\/b><\/strong>: Ecommerce platforms like Flipkart and Amazon India use AIdriven recommendation engines, digital wallets, and UPI payments to personalize shopping.<\/li>\r\n<li><b><\/b><strong><b>Manufacturing<\/b><\/strong>: Robotics, 3D printing, and IoT sensors have improved efficiency and reduced costs, changing competitive dynamics in sectors like aerospace and consumer electronics.<\/li>\r\n<li><b><\/b><strong><b>Energy<\/b><\/strong>: Rooftop solar panels and battery storage systems allow households and factories to generate their own electricity, reducing dependence on traditional utilities.<\/li>\r\n<\/ul>\r\n<ol start=\"4\">\r\n<li><strong><b> Political and Regulatory Environment<\/b><\/strong><\/li>\r\n<\/ol>\r\n<p>Government policies and regulations often reflect social priorities and can reshape industry dynamics.<\/p>\r\n<ul>\r\n<li><b><\/b><strong><b>India<\/b><\/strong>: The rollout of GST streamlined taxation but required industries to overhaul compliance systems. Recent EV subsidies and renewable energy targets have accelerated investment in clean energy.<\/li>\r\n<li><b><\/b><strong><b>Global Trade<\/b><\/strong>: Tariffs on Chinese electronics have shifted supply chains toward India and Vietnam, benefiting local manufacturers.<\/li>\r\n<li><b><\/b><strong><b>Environmental Regulations<\/b><\/strong>: Stricter emission norms in Europe and India have forced automobile companies to accelerate EV adoption.<\/li>\r\n<li><b><\/b><strong><b>Financial Services<\/b><\/strong>: Regulatory changes such as digital banking guidelines and stricter KYC norms have reshaped how banks and fintech firms operate.<\/li>\r\n<\/ul>\r\n<p>&nbsp;<\/p><\/div>\n<div id='text_slider_slide04' class='sa_hover_container' data-hash='Life-Cycle' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:400px; '><h2 style=\"text-align: left\"><strong>7.4 Life Cycle<\/strong><\/h2>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-77245 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Life-cycle-1.png\" alt=\"Life cycle\" width=\"1881\" height=\"1726\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Life-cycle-1.png 1881w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Life-cycle-1-300x275.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Life-cycle-1-1024x940.png 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Life-cycle-1-768x705.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Life-cycle-1-1536x1409.png 1536w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Life-cycle-1-50x46.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Life-cycle-1-100x92.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Life-cycle-1-150x138.png 150w\" sizes=\"(max-width: 1881px) 100vw, 1881px\" \/><\/p>\r\n<p>&nbsp;<\/p>\r\n<p>A useful way to predict industry sales and profitability trends is to view industries as evolving through stages, much like human development. Analysts often use a <strong><b>five stage model<\/b><\/strong>\u00a0to capture this progression:<\/p>\r\n<p><strong><b>Pioneering Development<\/b><\/strong><\/p>\r\n<p>At this startup stage, sales are modest and profits are often negative due to heavy R&amp;D and marketing costs.<\/p>\r\n<p>Example: Indian <strong><b>electric scooter start-ups<\/b><\/strong>\u00a0in 2015\u20132017 faced high development expenses and limited demand, but laid the foundation for future growth.<\/p>\r\n<p><strong><b>Rapid Accelerating Growth<\/b><\/strong><\/p>\r\n<ul>\r\n<li>Demand expands quickly, capacity is scaled up, and profit margins soar because competition is limited.<\/li>\r\n<li>Example: The <strong><b>Indian fintech industry <\/b><\/strong>(UPI apps like PhonePe, Paytm, Google Pay) experienced explosive growth after 2016, with transaction volumes rising exponentially and margins improving due to network effects.<\/li>\r\n<\/ul>\r\n<p><strong><b>Mature Growth<\/b><\/strong><\/p>\r\n<ul>\r\n<li>Demand stabilizes at high levels, growth continues but at a slower pace, and competition intensifies.<\/li>\r\n<li>Example: The <strong><b>smartphone industry in India <\/b><\/strong>post 2020: sales grew steadily at 10\u201315% annually, but margins compressed as multiple players (Samsung, Xiaomi, Vivo, Apple) competed aggressively.<\/li>\r\n<\/ul>\r\n<p><strong><b>Stabilization and Market Maturity<\/b><\/strong><\/p>\r\n<ul>\r\n<li>Industry growth aligns with overall economic growth. Profits depend on cost control and efficiency rather than demand expansion.<\/li>\r\n<li>Example: The <strong><b>cement industry <\/b><\/strong>in India: sales growth mirrors infrastructure spending and GDP growth, while margins vary depending on energy costs and regional competition.<\/li>\r\n<\/ul>\r\n<p><strong><b>Deceleration and Decline<\/b><\/strong><\/p>\r\n<ul>\r\n<li>Demand weakens due to substitutes or structural shifts, margins shrink, and capital returns fall below competitive levels.<\/li>\r\n<li>Example: The <strong><b>traditional print media industry <\/b><\/strong>has seen declining circulation as digital platforms dominate, forcing firms to rethink capital allocation.<\/li>\r\n<\/ul>\r\n<p>&nbsp;<\/p>\r\n<p><strong><b>\u00a0<\/b><\/strong><\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p><\/div>\n<\/div>\n<\/div>\n<script type='text\/javascript'>\n\tjQuery(document).ready(function() {\n\t\tjQuery('#text_slider').owlCarousel({\n\t\t\titems : 1,\n\t\t\tsmartSpeed : 400,\n\t\t\tautoplay : false,\n\t\t\tautoplayHoverPause : false,\n\t\t\tsmartSpeed : 400,\n\t\t\tfluidSpeed : 400,\n\t\t\tautoplaySpeed : 400,\n\t\t\tnavSpeed : 400,\n\t\t\tdotsSpeed : 400,\n\t\t\tdotsEach : 1,\n\t\t\tloop : false,\n\t\t\tnav : true,\n\t\t\tnavText : ['Previous','Next'],\n\t\t\tdots : true,\n\t\t\tresponsiveRefreshRate : 200,\n\t\t\tslideBy : 1,\n\t\t\tmergeFit : true,\n\t\t\tautoHeight : true,\n\t\t\tmouseDrag : false,\n\t\t\ttouchDrag : true\n\t\t});\n\t\tjQuery('#text_slider').css('visibility', 'visible');\n\t\tvar owl_goto = jQuery('#text_slider');\n\t\tjQuery('.text_slider_goto1').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 0);\n\t\t});\n\t\tjQuery('.text_slider_goto2').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 1);\n\t\t});\n\t\tjQuery('.text_slider_goto3').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 2);\n\t\t});\n\t\tjQuery('.text_slider_goto4').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 3);\n\t\t});\n\t\tvar resize_24727 = jQuery('.owl-carousel');\n\t\tresize_24727.on('initialized.owl.carousel', function(e) {\n\t\t\tif (typeof(Event) === 'function') {\n\t\t\t\twindow.dispatchEvent(new Event('resize'));\n\t\t\t} else {\n\t\t\t\tvar evt = window.document.createEvent('UIEvents');\n\t\t\t\tevt.initUIEvent('resize', true, false, window, 0);\n\t\t\t\twindow.dispatchEvent(evt);\n\t\t\t}\n\t\t});\n\t});\n<\/script>\n<\/p>                    <\/div>\n\t\t        \n                    <div id=\"slides-tab\" class=\"clearfix eael-tab-content-item \" data-title-link=\"slides-tab\">\n\t\t\t\t        <p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-11528 size-full\" src=\"http:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview.png\" alt=\"\" width=\"612\" height=\"408\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview.png 612w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview-300x200.png 300w\" sizes=\"(max-width: 612px) 100vw, 612px\" \/><\/p>                    <\/div>\n\t\t        \n                    <div id=\"videos-tab\" class=\"clearfix eael-tab-content-item \" data-title-link=\"videos-tab\">\n\t\t\t\t        <p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-11528 size-full\" src=\"http:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview.png\" alt=\"\" width=\"612\" height=\"408\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview.png 612w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview-300x200.png 300w\" sizes=\"(max-width: 612px) 100vw, 612px\" \/><\/p>                    <\/div>\n\t\t                    <\/div>\n        <\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Study Slides Videos 7.1.\u00c2\u00a0 Process\u00c2\u00a0 of\u00c2\u00a0 Industry\u00c2\u00a0 Analysis The industry analysis process is similar to economy analysis\u00e2\u20ac\u201dfirst is a macroanalysis of the industry to determine how this industry relates to the business cycle and what economic variables drive this industry. This macroanalysis will make the microvaluation easier when we use the several valuation techniques introduced &#8230; <a title=\"Learn About Industry Analysis From Stock Market Course\" class=\"read-more\" href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/industry-analysis\/\" aria-label=\"Read more about Learn About Industry Analysis From Stock Market Course\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":16695,"menu_order":7,"comment_status":"closed","ping_status":"closed","template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"class_list":["post-25015","markets","type-markets","status-publish","format-standard","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/25015","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets"}],"about":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/types\/markets"}],"author":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/comments?post=25015"}],"version-history":[{"count":9,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/25015\/revisions"}],"predecessor-version":[{"id":59629,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/25015\/revisions\/59629"}],"up":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/16695"}],"wp:attachment":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/media?parent=25015"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/categories?post=25015"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}