September Hackathon - Team 7

Reasoning – Used both Fundamental as well as Technical Factors: 1) Market Capitalization is kept more than 1500 since we are looking at keeping companies for the long-term horizon – in line with Core Portfolio. (Fundamental) 2) The weighted average ROCE over the last 10 years is kept more than 10% to ensure that the general trend of ROCE is positive over a long period, which ensures that a company is less likely to face negative returns. (Fundamental) 3) Price CAGR over 10 and 3 years are kept above 15% and 20% respectively, to ensure that we get a profitable company, that has been outperforming the benchmark consistently. (Technical) 4) The Sales and PAT CAGR over 5 years are kept over 10% to ensure that the company is showing constant growth in both. (Fundamental) 5) Promoter Holding is kept above 45% since a high percentage of promoter holding shows that the promoter themselves believe that it is better to hold the company. (Fundamental) 6) Pledged percentage is kept below 2% to ensure that debt is under control. (Fundamental) 7) Current price is multiplied by 1 year average of volume and is kept above 1 crore to ensure that companies that are highly traded and liquid are shown. (Technical) 8) We need companies that are not falling, so we are screening for companies that are less than 20% down from the 52-week high. (Technical) 9) Altman Z-score helps in covering some of the financial aspects of a company. It gives us insight into how strong a company is, financially speaking. Stocks that are at risk of bankruptcy will be screened out. Altman Z-score > 3 is considered safe concerning the near-term bankruptcy of a company. We are scanning with greater than 3. (Fundamental) 10) Piotroski score takes into account a company’s Profitability, Leverage, liquidity, and source of funds, and finally its Operating efficiency. While Piotroski Score >= 8 is preferable, we are scanning for Piotroski Score >= 6 according to current market conditions. (Fundamental) Note – Stock selection seems to be decently diversified across sectors.

by Rakesh