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). The table below is the original pass list (20–21 Jul) — the second-pass deep dig further down revised several verdicts (Hero, HCL, CAMS, Abbott); read both together.
| # | 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; Q4 FY26 volumes re-accelerated to ~11%. Risk: premium absolute multiple; MD's term ends May 2027. |
| 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. |
Second-pass deep dig (21 Jul 2026) — management churn, contingent liabilities, related-party transactions, last-60-days news, and disruption threats per stock. New findings only:
| Stock | What the deep dig found | Severity | Verdict impact |
|---|---|---|---|
| Page Industries | Q4 FY26 volumes re-accelerated to ~11% (the "4%" was the stale full-year figure); JM raised TP; FIIs accumulating. MD's term ends May 2027. | Low | Strengthened |
| CRISIL | ₹149 Cr income-tax demand under appeal (~19% of a year's profit); mild FII trimming; SEBI CRA-regulation overhaul in motion. CEO reappointed to 2029. | Medium | Pass holds |
| LTTS | Two C-suite exits in five weeks (Jan–Feb 2026); brokers cutting ER&D-sector PE multiples for AI (the "cheap vs median" bar itself is moving); Intelliswift = 16% of revenue but only ~6.6% of PAT. Offset: Q1 FY27 beat, margins +200bps, Mobility back to growth. | Medium | Pass holds |
| ITC | Government pre-loaded NCCD headroom (statutory rate 25%→60%, May 2026, effective rate held by notification) — tobacco tax hikes are now repeatable at will, not a one-off reset. Worst stock year in 22 years; targets still falling. | Medium | Pass holds — but the thesis must assume recurring tax risk |
| eClerx | Stock ran +27% in July on zero new fundamentals (worse entry); Q4 exit-rate soft (0.6% QoQ, utilization 76.5→74%, attrition 21%); new US onshoring-rules threat to contact-center work. Offset: first large agentic-AI win, $90M analytics book, concentration easing to 59%. | Medium | Pass holds — entry discipline needed |
| Abbott India | MD and CFO both exited within 4 months (H1 2025) — 4th MD change since 2020; three board departures; parent's US Treasurer joined the board Apr 2026, followed by a ₹1,394 Cr special dividend (75% to parent); growth decelerated to ~6.5%. | Med-High | Pass on numbers; governance watch |
| CAMS | SEBI's new expense-ratio (BER) regime went live 1 Apr 2026 — management guides MF yields down ~3% in FY27; FY26 PAT grew only ~1%; KFintech growing 3× faster and taking share (~32.5%). Offsets: MD reappointed to 2031, Jio BlackRock mandate won, non-MF book +24%. | High | Conditional — needs the non-MF book to outrun the fee squeeze |
| HCL Tech | ₹6,436 Cr transfer-pricing tax liability disclosed Apr 2026 with no prior contingent-liability disclosure — a disclosure-quality flag, ~117% of a year's tax expense; June–July broker downgrade cluster; guidance cut again; US layoffs tied to a client ramp-down. Offsets: $1.14bn deal win, Guardian GCC absorption. | High | Conditional — read the FY26 annual-report tax note before buying |
| Hero MotoCorp | 2025 leadership exodus (CEO + 5–6 seniors out; acting CEO for 8 months; new CEO has no auto background, 6 months in); Hero FinCorp (41% owned) swung to a ₹226 Cr FY26 loss, GNPA >5%, coupon-forced IPO ~3–5 Aug 2026; barred from using the "Hero" brand on EVs; funding both Vida and rival Ather (stake → 30.7%); ₹456 Cr GST demand. Offset: FII holding rose 27.4%→31.2%. | High | Hold off — FinCorp IPO outcome + two quarters of the new CEO |
| KPIT | 1-Jul-2026 profit warning: Q1 FY27 guided to the first YoY USD revenue decline in 23 quarters, Q2 "similar range" — no floor yet; five broker downgrades (JPMorgan Underweight ₹550); founder-chairman S.B. Pandit died May 2026 with succession open; a 2.24% block exit on warning day. Q1 results land 29 Jul. | High | Wait — 29-Jul print first; value-trap risk until a demand floor shows |
How to deploy — revised after the deep dig. Several names are cheap because their cycles are down; the entry method handles that, not avoidance.
1 · Buy staggered now (2–3 months): CRISIL, LTTS, Page Industries — fundamentals stable or improving, second pass found nothing thesis-breaking. Add Abbott India at smaller size only if you accept the governance-watch items.
2 · Buy after a named event: ITC — the Q1 FY27 cigarette-volume print (~Aug 2026) · eClerx — its Q1 FY27 results or a pullback from the +27% July run · HCL Tech — after the FY26 annual-report tax note clarifies the ₹6,436 Cr transfer-pricing item.
3 · Hold off until proven: KPIT — 29-Jul results + evidence of a demand floor · Hero MotoCorp — FinCorp IPO outcome (~3–5 Aug) + two clean quarters from the new CEO · CAMS — two quarters showing the non-MF book outrunning the BER fee squeeze.
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. The deep dig's job is to sort which fallers carry hidden problems (Hero, HCL's tax note) from those carrying visible, priced ones (ITC, LTTS).
Watch calendar — the dates that unlock the gated names:
29 Jul 2026 — KPIT Q1 FY27 results: does the guided revenue decline land as warned, and is there any floor signal? · ~3–5 Aug 2026 — Hero FinCorp IPO: subscription/listing outcome marks Hero's 41% stake and clears (or confirms) the coupon-step-up risk · ~Aug 2026 — ITC Q1 FY27: first real post-tax-hike cigarette-volume print vs the ~9–10% modeled decline · 13 Aug 2026 — Abbott India AGM / FY26 annual report: quantify group-company purchases and royalty · HCL FY26 annual report — the transfer-pricing tax note (years, jurisdictions, cash vs provision) · eClerx Q1 FY27 (date TBA) — exit-rate and utilization after the +27% July run · CAMS next two quarters — MF-yield decline vs the −3% guide and non-MF margin progress.
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).