- A five-stage routine, in order, with time budgets
- The kill criteria that let you stop early and move on
- How to write a one-page thesis you can be held to later
The purpose of a routine is not thoroughness — it's elimination. Most companies should be rejected quickly so the remaining time goes to the few that deserve it. A good process is mostly a series of reasons to stop.
Stage 1 — Understand the business (5 minutes)
- 1What does it sell, to whom, and how does it get paid? Write it in two sentences without jargon. If you can't, stop here — you cannot value what you can't describe.
- 2Which sector, and is it cyclical or secular?
- 3What's the market cap? Are you looking at a large, mid or small cap — and does that match your risk appetite?
- 4Who are the three main competitors?
"It's a diversified conglomerate with interests across several high-growth sectors" is not a description — it's a way of avoiding one. If the business genuinely cannot be described simply, that is itself a finding: complexity is where problems hide, and it makes the numbers harder to interpret for everyone, including the market.
Stage 2 — The kill checks (10 minutes)
Six checks, any one of which can end the analysis. Run them before you get invested in a story, because once you like a company these checks get quietly softened.
- Cash conversionKill if: Cumulative CFO ÷ PAT below ~0.5 over five years
- Interest coverageKill if: Below 2×, or falling every year
- Promoter pledgeKill if: Above 25% and rising
- Auditor / CFO continuityKill if: Resignations in the last three years without a clear explanation
- Return on capitalKill if: ROCE persistently below ~10%, with no recovery visible
- Related-party dealingsKill if: Large loans or sales to promoter-owned entities
Stage 3 — Quality (15 minutes)
- ☐Ten years of ROCE — level, range and direction.
- ☐Five years of gross, operating and net margin — direction first.
- ☐Revenue and profit CAGR over five and ten years, plus the year-by-year series.
- ☐EPS growth vs PAT growth — any dilution?
- ☐What is the moat, in one sentence? Which of the seven types?
- ☐Sector-specific metrics — volume growth, GNPA, revenue per employee, whatever this industry runs on.
- ☐Working-capital days: rising or falling?
Stage 4 — Valuation (10 minutes)
- ☐Where does today's P/E sit in the company's own ten-year range?
- ☐How does it compare to two or three direct peers?
- ☐A second multiple appropriate to the sector — P/B for a lender, EV/EBITDA where debt differs.
- ☐What growth does the price imply? Compare against the ten-year record.
- ☐If it looks cheap: which of the four value traps might this be?
Stage 5 — Write the thesis (5 minutes)
This is the stage everyone skips, and it's the one that compounds your skill. Five sentences, written before you act, dated, and kept.
A template. Fill each line with something specific enough to be judged right or wrong later.
- 1. The business
- what it does, in one line
- 2. Why it's good
- the moat and the numbers proving it
- 3. Why it's mispriced
- what the market is missing or over-fearing
- 4. What must go right
- the two or three things the thesis needs
- 5. What would prove me wrong
- specific and measurable
Write down what would prove you wrong, before you own anything. Once you own it, your mind will negotiate — and it will win.
The routine, at a glance
- 1. Understand the businessTime: 5 minOutcome: Can I describe it in two sentences?
- 2. Kill checksTime: 10 minOutcome: Most companies stop here — that's correct
- 3. QualityTime: 15 minOutcome: Is this worth owning at any price?
- 4. ValuationTime: 10 minOutcome: Is this price sensible?
- 5. ThesisTime: 5 minOutcome: What am I claiming, and what disproves it?
Once a quarter, for anything you own: read the results, update the three or four numbers your thesis depends on, and re-read what you wrote. Has anything in line 5 happened?
That's it. Not daily price-watching — quarterly evidence-checking. The results are the only new information that actually bears on your thesis, and they arrive four times a year.
See it live · The scored board here does stages 2 and 3 mechanically across the full universe — so your forty-five minutes go to companies that already cleared the kill checks.
Start from the board →In one screen
- 1The routine exists to eliminate, not to be thorough — most companies should stop at stage 2.
- 2Run the kill checks before you develop an opinion, not after.
- 3Quality first, valuation second. A cheap bad business is still a bad business.
- 4Write five sentences, and make the fifth one specific and measurable.
- 5Review quarterly against the results, not daily against the price.
Check yourself
Nothing is scored or stored — the explanation after each answer is the point.
Why do the kill checks come before the quality analysis?
Which is a usable line 5 ("what would prove me wrong")?