Investment Banking vs Equity Research

If you’ve ever heard anything about finance, investments or stock markets, you probably have come across terms like Investment Banking and Equity Research. People often get confused between these two terms, but their core functions are different and essential to each.

At the core, investment bankers help businesses acquire the capital they need to grow and expand. On the other hand, equity research analysts help investors make informed investment decisions. Together, they keep money flowing to where it can do the most good. Both involve analysing companies, using financial models, and staying updated on markets. But they have very different purposes, focus on distinct goals, and operate in different ways.

In this blog, we’re going to simplify what each of these roles involves,  what sets them apart and how they work together. 

The Capital Markets 

Let’s begin with the basics first.

Capital markets are those financial markets where businesses and governments raise capital, and investors seek opportunities to earn good returns. Companies issue their stocks or bonds to secure funding for growth, while investors provide that capital in exchange for the potential to grow their wealth. This exchange creates a marketplace that fuels economic progress.

Within this system, two key professionals play important but different roles:

• Investment Bankers work on the corporate side. They help companies raise capital and manage major transactions. Investment banks structure deals, connect companies with investors, and ensure the fundraising process runs smoothly.

• Equity Research Analysts focus on the investor side. They analyse financial data, industry trends, and company performance to produce detailed reports and investment ratings. Their insights help institutional and individual investors make informed decisions about buying, holding, or selling stocks.

Let’s understand each of these roles in detail:

What Does an Investment Banker Do?

Investment bankers work closely with companies. They assist them in making informed decisions about their finances, such as for acquisitions or divestments. They support businesses in raising capital through shares or bonds, advising them through mergers and acquisitions (M&A) to gain a better market position. They also manage the process of launching a company’s Initial Public Offering (IPO) in primary and secondary markets. 

Example: When Tata Capital, a leading Indian non-banking financial company, decided to launch its IPO in 2025, it selected investment banks such as ICICI Securities, Axis Capital, and others to help price the shares, structure the deal, and bring it to market

Overall, investment bankers are deal-makers who support companies in achieving their growth and financial goals. 

In short, investment banking services include:

• Underwriting initial public offerings (IPOs) 
• issuance of bonds, 
• Advising on mergers and acquisitions

What Does an Equity Research Analyst Do?

An equity research analyst basically studies the financial reports of public companies to help investors in deciding whether to invest or not. They deeply research about the company’s financial statements, business performance, and industry trends to understand how well the company is performing and what might be the future outlook of the company. 

Equity research analysts build financial models that can predict future earnings and use valuation methods to figure out if the company is truly worth its value or not. 

These research analysts also create research reports stating their investment opinion for a company, like “Buy,” “Hold,” or “Sell”, along with other key insights and price targets of a company’s share. These reports are used by professional investors like fund managers and banks to make further investment decisions. 

With the advancement of technology, everything is now easily accessible on the internet. Researchers use various tools available online which help them in collecting and analysing the information easily.

• Example:
  Reliance Industries announces its quarterly results, equity analysts from major brokerages like Motilal Oswal, ICICI Securities, and Morgan Stanley release detailed forecasts for revenue, EBITDA margins, and segment-specific performance (such as Jio, Retail, and Oil & Gas).

Investment Banking vs. Equity Research

Here’s a comprehensive comparison to show you the key differences at a glance:

Feature	Investment Banking	Equity Research
Primary Focus	They execute and advise on financial transactions for companies.	They analyse public companies and provide investment recommendations.
Main Activities	They work mostly on M&A advisory, IPOs, debt/equity capital raising, and financial restructuring.	They do in-depth company research and create financial models for valuation. Prepare research reports to give investment insights.
Client Type	These work with corporations, governments, private equity firms, and high-income individuals.	They work with Institutional investors, internal portfolio managers and retail investors
Nature of Work	Investment bankers work on a project basis. They work on deals.	Research analysts continuously research and monitor companies.
Time Horizon	They focus on specific, often short-to-medium term transaction timelines.	Their focus is on the long-term view of company fundamentals and stock performance.
Goal	To facilitate large-scale financial events and raise capital for clients.	To deliver valuable insights that help investors make informed decisions about stocks.

 

Do Investment Banks and Equity Research Analysts Work Together? 

Yes, they mostly work together, especially when there are any major financial events like IPOs or mergers. While their main focus is different, their work is interrelated

For instance, when a company plans to go public in the market, investment bankers may discuss with research analysts to understand the market’s view of the company and the industry. This helps the bankers to decide the price range of the company’s shares and when to launch the IPO.

Equity research analysts track the latest news and events, such as mergers and acquisitions (M&A), which are managed by investment bankers, to prepare their research reports. The latest news about markets and any company are now easily available on various financial tools on the internet.  When any major deal happens or such news comes out, analysts update their financial models, change their predictions and sometimes even change their recommendations on the company’s stock.

So even though investment banking and equity research analysts have different goals, they often work together to provide a clearer picture of what’s happening in the market.