A guide to using our stock filters
Prime Screener is a tool for DIY equity investors. It seeks to help you screen stocks based on key fundamental metrics. This makes your investing a more process-driven approach, where you can eliminate stocks that are do not make the cut in terms of quality, growth or valuation metrics and focus on those that do.
Prime Screener does not give you all the data, metrics, or ratios that exist. Instead, we have only picked those metrics that we think are necessary, relevant and useful in filtering stocks before you get to analysing individual companies.
We have divided these metrics into the following heads:
- Quality, key parameters related to a company’s balance sheet
- Growth, key parameters related to a company’s profit & loss statements
- Valuation: key parameters related to the company’s price in relation to key metrics such has earnings or book value.
- Ownership: An additional filter to know qualitative aspects such as shareholding pattern of promoters, MFs, and FPIs besides the proportion of promoter pledging.
This guide explains each of these and how to use it.
In addition to these filters, we have Premium Screeners. Our research team has designed these screeners which use a completely different set of filters and trends to shortlist stocks. Our research team will be updating and adding to this list. Read our guide to our Premium Screeners here.
You can download a PDF version of this document here.
How should you use Prime Screeners?
- Shortlist stocks based on growth, quality, valuation, and ownership metrics.
- Filters in each metric are those that are useful and genuinely relevant for analysis so that you arrive at a meaningful shortlist. We haven’t stuffed every conceivable filter which will only increase complexities for you.
- If you’re looking at banking stocks, make sure to use the filters specific to banks such as NPA ratios, loan book or capital adequacy. That’s information not easily available in a single place or tool elsewhere!
- Premium Screeners are filters pre-designed by PrimeInvestor’s research team. These filters do not overlap with the other metrics. You can further refine the shortlist from running Premium Screeners by adding on other growth, quality, valuation or ownership filters.
- Save the filters you’ve set up for easy access the next time you want to run screeners.
- Click on individual stock names for details on balance sheet, profit & loss statements, quarterly results, ratios and more, which you can use to further analyse your shortlisted stocks.
Section 1 – Points to note on data
Before getting to the filters and explanations, a few important points you need to note:
- The screener is not a stock data tool. It is an analysis tool. If you wish to download raw stock data, you will need to go to individual stock details pages.
- We have used consolidated data wherever applicable and standalone in all other cases.
- The screener is provided only for NSE listed companies. We believe this adequately covers the universe of tradable stocks. You can go to the stock details page to check specifics of a company listed only on the BSE and not on the NSE.
- The data provided will be the latest data filed by the company with the stock exchanges. This could vary between companies. For example, the financial year end may be March for some, December for some and September for others. Similarly, at quarter ends, some companies may have declared results while others may be yet to do so. The calculations given in the screener take into account the latest disclosed data available from our data provider at the time you use the tool.
- In filters that use compounded annual growth, where the beginning or end values are losses, we have not calculated the CAGR.
- Some filters given will be relevant for some sectors only and not for others. You need to be aware of which ones will suit the sectors/companies you are looking at. For example, while you would find data on sales or EBITDA for banking companies, the right metrics to see would be net interest income and net interest margin. We have tried to provide relevant sector-specific data wherever available.
- Some companies may not have past data disclosure either because they were listed through a recent IPO or were demerged from some other entity. You may not find growth or quality metrics for such companies.
Section 2 – How to start
By default, you will get the entire universe of stocks at the outset.
From this, you can begin by choose your stock universe by setting ranges for one or more of the following filters:
- Stock price
- Stock market cap
- Price-to-earnings ratio
- Price-to-book ratio
For example, you can choose the chemicals sector and give a range of less than Rs 5,000 crore market cap, or a P/E ratio of less than 10 times.
You can also choose to ignore the filters above and move directly to the filters explained below.
Section 3 – Filters and how to use
Filters help you screen stocks based on multiple criteria. For example, you might want to choose companies with revenue of over Rs 100 crore. Or you may choose companies with say PAT growth of over 10%. Or you might want companies that grew PAT by 10% while also having positive operating cash flows for the past few years.
We have organized these filters into 4 broad heads as follows:
- Growth filters – key parameters related to a company’s profit & loss account
- Quality filters – key parameters related to a company’s balance sheet
- Valuation filters – key parameters related to a company’s price in relation to metrics such as earnings or book value.
- Ownership filters – metrics to understand shareholding pattern of promoters, MFs and FPIs
The full list of metrics is explained below, along with how to use each of them in case you are new to equity investing.
The output derived in Prime Screeners are not recommendations given by Redwood Research. Prime Screener is only a tool to provide you with output based on criteria that you choose. Prime Screener is meant for you to filter, shortlist, and identify stocks from the whole stock universe that you wish to further analyse. Redwood Research will not be responsible for any investment decisions you take based on these screeners.
Redwood Research (with brand name PrimeInvestor) is an independent research entity offering research services on personal finance products to customers. We are a SEBI registered Research Analyst (Registration: INH200007478).