REDUCTION IN DEBT--INTRINSIC COMPOUNDING

...Another unique filter that you can use to filter down on stocks:- Filtered both steel wires (Usha M, 2 years ago) and an auto anc player based out of Coimbatore using this. Recently filtered an Iron ore and Pellets company using this frame work. Debt < Debt 3 years back (Debt has to fall) Finance Cost < Finance Cost 3 years back (Interest cost reduction leads to growth in PAT) Debt to Equity < 0.5 (Points to massive deleveraging) ROCE> Roce 3 years ago (Expansion in ROCE due to reduction in costs & Margins expanding). Deleveraging is a really strong mental model- markets often rerate the story if the ROCE improves and debt goes to a manageable level. Debt < Debt 3 years back (Debt has to fall) Finance Cost < Finance Cost 3 years back (Interest cost reduction leads to growth in PAT) Debt to Equity < 0.5 (Points to massive deleveraging) ROCE> Roce 3 years ago (Expansion in ROCE due to reduction in costs & Margins expanding). Another unique filter that you can use to filter down on stocks:- Filtered both steel wires (Usha M, 2 years ago) and an auto anc player based out of Coimbatore using this. Recently filtered an Iron ore and Pellets company using this frame work.

by Moti