How It Works
The Valyra Framework
Valyra Score — a systematic 6-pillar scoring model adapted from Graham-Buffett-Munger principles for Indian listed equities.
Philosophy
Warren Buffett and Charlie Munger evolved from Graham's pure “cigar butt” value investing to something more nuanced: buying high-quality businesses at fair prices and holding them for the long term.
The key insight: time amplifies compounding in quality businesses, making entry price less critical than business quality.
India's structural GDP growth (~7% real, ~11% nominal), large domestic consumption story, and promoter-led business structures create a unique context. The Valyra model is calibrated for these realities — not a direct port of US-market metrics.
Universe & Screening
How 500 stocks become 25–60 scored candidates — 6 hard gates, all must pass
Starting universe: Nifty 500 + BSE 500 supplementary ≈ 550 stocks. Pre-filter removes PSU banks, complex NBFCs, stocks listed <5 years, market cap <₹500 Cr, pledge >30%, and ASM/ESM list stocks.
Earnings Quality Gate
Positive OCF in 5 of last 5 years; OCF/PAT > 0.80
Moat Proxy Gate
ROCE > 15%, ROE > 15% (both on 5yr avg)
Balance Sheet Fortress Gate
D/E < 1.0; Interest coverage > 4x
Valuation Sanity Gate
P/FCF < 40; EV/EBITDA < 50 (India quality premium calibrated)
Management & Promoter Gate
Promoter holding > 35%; pledge > 30% = hard exclude
Revenue Growth Gate
Revenue CAGR > 10% over 5 years — filters real decliners in India's inflationary context
6-Pillar Scoring Model
Final Valyra Score = Σ(Pillar Score × Weight) × 10 → Range: 0–100
Core metric: ROCE consistency, gross margin stability
Score = f(5yr ROCE avg, ROCE std dev, gross margin trend)
India nuance: Moat is the primary driver of long-term compounding. Brand + distribution moats dominate Indian consumer markets.
Core metric: P/FCF vs. thresholds, EV/EBITDA vs. thresholds
Score = 60% × f(P/FCF) + 40% × f(EV/EBITDA) · DCF used as qualitative overlay only
India nuance: Time amplifies compounding in quality businesses — entry price matters less than business quality over the long run. DCF is fragile (1% WACC change swings value 30–40%); P/FCF and EV/EBITDA are more robust primary inputs.
Core metric: OCF/PAT ratio, margin trend, working capital days
Score = f(OCF/PAT 5yr avg, margin trend slope, WC days)
India nuance: OCF/PAT already enforced at Gate 1; this pillar rewards consistency above the threshold. Working capital cycle is critical — PAT can be manipulated.
Core metric: D/E, interest coverage, promoter pledge %
Score = f(D/E, int. coverage, pledge %). Pledge > 20% = penalty.
India nuance: Promoter pledge is an India-specific fortress risk indicator.
Core metric: Incremental ROCE, dividends, equity dilution
Score = f(incremental ROCE, DPS growth, share count change)
India nuance: Incremental ROCE is the best forward-looking moat indicator. A 25% ROCE on existing assets but 10% incremental ROCE means the moat is shrinking in slow motion.
Core metric: Promoter holding %, RPT transactions, auditor quality
Score = f(promoter %, RPT/revenue, auditor track record)
India nuance: SEBI disclosures make governance partially measurable.
Penalty Deductions
Applied post-scoring as deductions from Valyra total
| Trigger | Deduction |
|---|---|
| Promoter pledge > 20% | –5 pts |
| Promoter pledge > 30% | Excluded from universe |
| Qualified audit opinion | –8 pts |
| SEBI / ED action (any 5yr) | –10 pts |
| Auditor change (last 2yr) | –4 pts |
| High RPT (> 10% revenue) | –3 pts |
| FII exodus (3 qtrs) + corroborating signal (elevated pledge / auditor change / weak OCF/PAT) | –2 pts |
| FII exodus (3 qtrs) standalone — macro/index-driven | Flagged, no deduction |
Limitations & Caveats
Promoter pledge data lags by ~3 months (quarterly BSE filings). The last known value is displayed.
IND AS adoption (2017) creates discontinuity with pre-FY17 data. All ratio calculations use FY17 onwards.
Banks and NBFCs use a modified scoring model (ROA, NIM, GNPA replace ROCE-based gates).
OCF data from yfinance can be unreliable; Screener.in is used as primary source.
Valyra is a quantitative screener, not a qualitative analysis. Management quality, industry disruption risks, and macro factors are not fully captured.
This tool does not constitute SEBI-registered investment advice. Always consult a registered advisor.