Screening

Filtering a universe down to a manageable candidate list using quantitative criteria.

A screen that reduces 4,500 listed companies to 45 has done its job, which is to allocate attention rather than to select investments.

Good screens are simple and slow-moving. Return on capital above a threshold, leverage below one, positive operating cash flow in each of five years, and a market capitalisation above a liquidity floor will produce a list worth reading.

Screens on Indian data need care. Reported figures differ between providers, standalone and consolidated are mixed up routinely, and one-off items distort every ratio built on a single year.

Screen on five-year averages, then verify from the filings.