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Formula sheet/NISM Series XV: Research Analyst/Legal and Regulatory Environment
[ LEGAL AND REGULATORY ENVIRONMENT ]

Graded Surveillance Measure (GSM) & Research Analyst Thresholds

GSM Stage1Trigger:Net Worth≤Rs10Cr AND Net Fixed Assets≤Rs25Cr AND(P/E<0OR P/E≥2×Benchmark P/E)OR Market Cap<Rs25Cr AND(P/E>2×Benchmark P/E OR(P/E<0AND[P/BV<0OR P/BV≥2×Benchmark P/BV]))\text{GSM Stage} 1 Trigger: \text{Net Worth} \le Rs 10 \text{Cr AND Net Fixed Assets} \le Rs 25 \text{Cr AND} (P/E < 0 \text{OR P}/E \ge 2 \times \text{Benchmark P}/E) \text{OR Market Cap} < Rs 25 \text{Cr AND} (P/E > 2 \times \text{Benchmark P}/\text{E OR} (P/E < 0 AND [P/BV < 0 \text{OR P}/BV \ge 2 \times \text{Benchmark P}/BV]))
RA Conflict Disclosure:Actual/beneficial holding≥1%of subject company securities at month-end.\text{RA Conflict Disclosure}: Actual/\text{beneficial holding} \ge 1\% \text{of subject company securities at month-end}.
Variables

Protects market integrity against shell companies, unwarranted speculation, and analyst conflicts of interest.

Worked example
Testing a Stock Against the GSM Stage 1 Trigger

A research analyst is screening Vayugen Textiles Ltd, a small, loss-making listed company, to determine whether it would be flagged under GSM Stage 1. Vayugen's Net Worth is Rs 8 Crore, Net Fixed Assets are Rs 20 Crore, and its trailing P/E is −12 (the company reported a loss). Determine whether GSM Stage 1 is triggered.