Every company below was checked against the same three questions. Pass all three → Tier 1. Pass with one real catch → Tier 2. Fail any → rejected (listed at the bottom, with reasons).
ROCE — return on capital employed — consistently high. This filters out capital-hungry, low-quality businesses.
Near-zero debt, and reported profit backed by operating cash flow. Profit is an opinion; cash is a fact.
5-year profit growth judged against the PE being paid. A PE of 60 can be cheap at 30% growth; a PE of 8 can be dear at 0%.
The money chart: 5-year profit CAGR against today's PE. Up and to the left is where you want to shop — high growth you're not overpaying for. Hover any dot for full numbers.
ROCE across all 19 qualifying names. Anything above 20% means the business compounds shareholder capital well; above 40% is elite territory.
| Company | Mcap ₹Cr | ROCE | PE | 5-yr profit CAGR | Debt | Notes |
|---|
| Company | Mcap ₹Cr | ROCE | PE | 5-yr profit CAGR | The catch |
|---|
| Company | Why it failed |
|---|---|
| Supreme Industries | 5-yr profit CAGR is negative (−1%) at PE 47 |
| Balkrishna Industries | ROCE 11%, 5-yr profit CAGR −2%, rising debt |
| Astral | PE 68 for 7% profit growth |
| Ratnamani Metals | TTM sales −13%, profit −10%, ROCE below bar |
| Tata Elxsi | Growth stalled; stock −43% in a year; earnings trend unreliable |
| Schaeffler India | PE 53 for ~10% growth |
| Indraprastha Gas | Cheap (PE 14) but 6% growth, with a big other-income component |
| Narayana Hrudayalaya | ROCE 15%, ₹5,857 Cr borrowings — fails filters 1 and 2 |
| AIA Engineering | Sales growth slowed to 3% TTM; working-capital days ballooned |
| Dr Lal PathLabs | PE 54 for 12% growth |
| Vinati Organics | 11% profit growth; stock negative over 5 years; ROCE below 20% |
Sixteen companies went through the full forensic treatment: 5-year cash-flow-vs-profit, pledging, promoter-holding trend, working-capital trends, PE vs own history, cycle position, and red-flag searches (SEBI, auditors, governance). Nine passed. Only passes are listed.
| # | Company | Bucket | PE | ROCE | 5-yr CFO÷PAT | Why it passed · main risk |
|---|---|---|---|---|---|---|
| 1 | ITC Tobacco-FMCG · ₹3.54L Cr | Large | 17 | 39% | 0.91 | The −40% headline profit is a verified demerger base effect, not decay; underlying FY26 grew; PE 29% below 5-yr avg; 5.1% dividend yield. Risk: FY27 cigarette-volume hit from the Feb-2026 tax hike; BAT still selling stock. |
| 2 | HCL Technologies IT services · ₹3.31L Cr | Large | 18 | 31% | 1.27 | Cash flow beat profit all 5 years; debtor days improving; zero pledge; PE below its 10-yr median; 4.4% yield. Risk: FY27 growth guided at just 1–4%; AI-cannibalization debate. |
| 3 | Hero MotoCorp Two-wheelers · ₹99.6k Cr | Large | 17 | 35% | 1.17 | Zero pledge, flat promoter holding, negative working capital, record FY26; Vida EV share climbed to ~11% (#4); PE below ~20 median. Risk: chairman's ED case stayed not closed; core 100cc share eroding. |
| 4 | CRISIL Ratings · ₹31k Cr | Mid | 37 | 33% | 1.01 | S&P Global's 66.6% stake rock-steady; PE at the bottom of its own band after a −28% year while TTM profit accelerated +19%. Risk: absolute PE still high for ~14% structural growth. |
| 5 | L&T Technology Services Engineering R&D · ₹35.5k Cr | Mid | 26 | 27% | 1.13 | Cash > profit every year, debtor days improved 94→67, clean audits; PE ~20% below its 10-yr median after a flat 5 years. Risk: underlying growth is mid-single-digit until the ER&D cycle turns. |
| 6 | Page Industries Apparel (Jockey) · ₹45k Cr | Mid | 57 | 64% | 1.07 | Jockey license locked to Dec 2040; debtor days ~14 (no channel stuffing); PE 25–30% below its own historical 74–79 band. Risk: volume growth only ~4%; premium absolute multiple. |
| 7 | Abbott India Pharma MNC · ₹60k Cr | Mid | 39 | 45% | 0.91 | Promoter at the 75% cap with zero selling; net cash; only immaterial penalties on record; PE below its 42–47 band after −31%. Risk: ~14% of profit is treasury income; unlisted Abbott sister entity takes some group growth. |
| 8 | CAMS MF registrar · ₹19k Cr | Small | 43 | 47% | 1.13 | Cash exceeded profit in every one of the last 5 years; duopoly with ~68–70% of MF AUM serviced; unmodified audits. Risk: top-5 AMC clients ≈ 42% of revenue; SEBI fee-pressure overhang. |
| 9 | eClerx KPO / analytics · ₹17.7k Cr | Small | 25 | 35% | 1.12 | Cash-backed every year, zero pledge, promoter holding rising, consistent buybacks; PE below its own median. Risk: top-10 clients ≈ 60% of revenue. |
| 10 | KPIT Technologies Auto software · ₹15.4k Cr | Small | 23 | 26% | 1.65 | Best cash conversion of all 16 checked; zero pledge; unqualified audit; trades below its entire 5-yr PE band. Risk: this is the turnaround bet — FY26 profit fell 24% on the auto-R&D slowdown. |
How to deploy — three entry rules. Several of these are cheap because their cycles are down; the entry method handles that, not avoidance.
1 · Buy normally, staggered over 2–3 months: HCL Tech, Hero MotoCorp, CRISIL, LTTS, Page Industries, Abbott India, CAMS, eClerx — fundamentals stable or improving; the price falls are deratings, not deterioration.
2 · Buy after one data point: ITC — wait for Q1 FY27 results (~Aug 2026), the first quarter showing real post-tax-hike cigarette volumes. Analysts model a ~9–10% volume drop; if the print is near that, the price already reflects it — if far worse, you avoided catching it early. A 5.1% yield means waiting costs little.
3 · Buy only on confirmation: KPIT — the one genuine falling knife: earnings are still declining and the auto-R&D spending floor is unknown. Enter only after one quarter of profit stabilization or margin guidance being met. If that never comes, never buy it — a 9-stock portfolio is a fine outcome.
Why not just avoid the fallers: dropping everything that's down converts the strategy from "buy quality before it re-rates" into "buy quality after everyone agrees it's fine" — i.e., paying PE 60 for comfort. The screen exists to buy the first kind.
Locked 21 Jul 2026 — 3 large / 4 mid / 3 small. Every name: near-zero debt, unpledged (ITC and CAMS have no promoter), cash-backed earnings, valuation at or below its own history, no SEBI/auditor flags. Sector spread — tobacco-FMCG, IT ×2, two-wheelers, auto software, ratings, apparel, pharma-MNC, capital-markets infra, KPO — no bucket dominates.
Checked and rejected in forensics (so you know they were considered): Ajanta (Jun-2026 promoter pledge + ₹1,024 Cr selldown), Godfrey Phillips (cash flow 46% of profit), Caplin Point (0.80 + rising receivables), Swaraj Engines (PE at top of band, cycle top), ICRA (0.80, treasury-heavy), Dhanuka (0.66), P&G Hygiene (royalty creep, ad-cut profits), Cera (0.78, earnings contracting), IEX (market coupling proceeding).