Eicto Original Score: The 100-Point Quantitative Scorecard for Indian Stocks (Explained)

What is the Eicto Original Score?

The Eicto Original Score is Eictovision's proprietary, fully automated quantitative scorecard built exclusively for Indian equities. Unlike single-metric tools (which show just one ratio like P/E or ROE), the Eicto Original Score is a multi-dimensional, weighted framework that evaluates a stock across 10–12 parameters simultaneously and condenses the result into a single score out of 100.

The score is divided into two distinct evaluation engines: one for regular companies (Industrial, Consumer, IT, FMCG, Pharma, etc.) and one for Banking & Financial Services (Banks, NBFCs, Housing Finance, Microfinance). This is a critical distinction because the financial structure of a bank is fundamentally different from a manufacturing company — and using the same metrics for both would lead to misleading conclusions.

Part 1: The Core Framework — For Industrial & Consumer Stocks

For regular (non-banking) companies, the Eicto Original Score evaluates 11 quantitative parameters, each assigned a specific weight (1x or 2x) based on its importance:

1. Market Cap — The "Sweet Spot" Filter (Weight: 1x)

The score checks if the company's market capitalisation falls between ₹500 Cr and ₹10,000 Cr. This is the "Mid-Cap sweet spot" — a company large enough to have institutional trust and governance, but small enough that genuine growth and re-rating potential still exists. Mega-cap companies (>₹10,000 Cr) are marked as "Moderate" since the easy compounding phase is often over.

2. Revenue 5-Year CAGR — Durable Demand (Weight: 2x)

A company must demonstrate consistent revenue compounding of 15%+ over five years. Single-year sales spikes can be due to one-time events, commodity price cycles, or accounting tricks. A 5-year CAGR above 15% confirms the company is capturing real, sustained market share. This parameter carries double weight.

3. Profit 5-Year CAGR — Expanding Margins (Weight: 2x)

Profit growth is checked against a tougher benchmark of 20%+ CAGR over five years. The logic: if profits grow faster than revenue, the company's margins are expanding — a sign of genuine operating leverage, pricing power, and competitive moat. This is one of the most important checks and carries double weight.

4. Return on Equity (ROE) — Capital Efficiency (Weight: 2x)

ROE above 20% confirms the company generates superior returns on shareholders' capital. A company that can consistently compound at 20%+ ROE without excessive debt is one of the rarest and most valuable assets in the stock market. Double weight reflects its importance.

5. Return on Capital Employed (ROCE) — True Efficiency (Weight: 2x)

ROCE above 15% verifies the business creates value above its Weighted Average Cost of Capital (WACC). Unlike ROE, ROCE includes debt in the denominator, making it impossible to "game" by simply taking on more leverage. A company with high ROCE is a genuine value creator.

6. Debt-to-Equity — Balance Sheet Safety (Weight: 2x)

A D/E ratio below 0.5x ensures the company funds its growth through internal cash generation, not borrowed capital. High leverage amplifies downside risk during slowdowns. Companies with D/E below 0.5x are far more resilient to economic cycles and interest rate changes. This check carries double weight.

7. Operating Profit Margin (OPM %) — Pricing Power (Weight: 1x)

OPM above 15% reflects strong pricing power, cost discipline, and sustainable competitive advantages. A wide operating margin is difficult for competitors to replicate and is a hallmark of businesses with genuine moats.

8. Promoter Holding — Skin in the Game (Weight: 2x)

Promoter holding above 50% demonstrates that the founding family or management has significant skin in the game. When promoters hold a majority stake, their financial fate is directly linked to minority shareholders. This alignment of interests is a critical positive signal. Double weight.

9. Pledged Promoter Shares — Hidden Risk (Weight: 2x)

Pledged shares below 5% is the safe zone. When promoters pledge their shares to take loans, they create a forced-selling trigger: if the stock price falls below a certain level, lenders dump shares in the open market, causing a cascading crash. High pledging (>10%) is a critical red flag, marked as "Fail". Double weight.

10. Cash from Operations (CFO) — Accounting Sanity (Weight: 1x)

A positive CFO confirms that business profitability is real and not merely an accounting artefact. Companies can show paper profits through aggressive revenue recognition (booking sales before cash is collected). Positive operating cash flow proves that the business is actually generating real money.

11. Debtor Days & Inventory Turnover — Working Capital Health (Weight: 1x each)

Debtor Days below 90 days indicates customers pay promptly — a sign of strong bargaining power. Inventory Turnover above 3x means products are moving efficiently, minimising carrying costs and working capital requirements. Together, these two metrics reveal the operational efficiency hidden inside the balance sheet.

Part 2: The Banking Framework — Specialist Checks for Banks & NBFCs

Banks cannot be evaluated using the same lens as manufacturers. A bank's "debt" is its liabilities to depositors — completely different from a company borrowing for expansion. The Eicto Original Score automatically detects if a stock belongs to the banking sector and switches to a six-parameter specialist banking framework:

1. Market Cap — Banking Sweet Spot (Weight: 1x)

For banks, the target range is ₹1,000 Cr to ₹15,000 Cr. This reflects an emerging financial institution with significant CASA (Current Account Savings Account) and credit growth potential — large enough to be safe, small enough to deliver strong returns.

2. Return on Assets (ROA) — The #1 Banking Metric (Weight: 3x)

ROA above 2.5% is the gold standard for banks. ROA measures how efficiently a bank converts its entire asset base (loans, investments) into net profit. Because banks operate with high leverage by nature, ROA (not ROE) is the true measure of underlying profitability. It carries the highest weight (3x) in the banking framework.

3. Return on Equity (ROE) — Shareholder Returns (Weight: 2x)

ROE above 18% in banking confirms the institution earns a premium return on shareholders' capital. The threshold is lower than the 20% for non-banks because banking inherently involves higher leverage.

4. Revenue 3-Year CAGR — NII Growth (Weight: 2x)

For banks, revenue means Net Interest Income (NII) + Fee Income. A 3-year CAGR (not 5-year, since banking cycles are shorter) above 15% reflects a growing franchise. Expanding NII signals a growing loan book, better CASA ratios, and increasing customer acquisition.

5. Gross NPA % — The Most Critical Red Flag (Weight: 3x)

Gross Non-Performing Assets (NPA) below 2% indicates a clean loan book. This is the most unique check in the banking framework and carries 3x weight — equal to ROA. Elevated NPA signals deteriorating asset quality and potential hidden credit losses that could wipe out years of earnings. A Gross NPA above 4% is automatically marked as "Fail".

6. Net Interest Margin (NIM) — Spread Quality (Weight: 2x)

NIM above 3% indicates a favourable spread between what the bank earns on loans and what it pays on deposits. A wide NIM is a sign of a bank's competitive strength — either its low-cost CASA base allows it to fund cheaply, or its high-yield lending strategy allows it to earn more.

7. Promoter Holding (Banks) — Governance (Weight: 1x)

For banks, the promoter threshold is set at 40% (lower than the 50% for non-banks) because RBI regulations often limit promoter holding in private banks. This adjusted threshold is critical for fair evaluation of banking stocks.

Part 3: Forensic & Trap Filters — For All Stocks

Beyond the quantitative checks, the Eicto Original Score applies four forensic "Risk Filters" that run on all stocks regardless of sector. These are the most sophisticated part of the system, designed to detect accounting manipulation and governance red flags:

1. Cash Flow Reality Check (5-Year CFO vs Profit)

This compares 5-year cumulative Operating Cash Flow (CFO) to 5-year cumulative Net Profit. The CFO/Profit ratio must be ≥0.7x. If a company shows ₹1,000 Cr in profits over 5 years but only ₹300 Cr in actual cash from operations, it is a massive red flag of aggressive revenue recognition or channel stuffing. Note: This filter is automatically skipped for banking stocks, where CFO is naturally driven by loan disbursements and deposit flows rather than product sales.

2. CWIP Trap (Capital Work In Progress)

If a company's CWIP (assets under construction) is above 15% of Total Assets, but its revenue is growing at less than 10% simultaneously — it triggers a "Critical Alert". This combination is a classic red flag for capital diversion, where funds raised from the public are being misused under the guise of "capital expenditure". CWIP between 8–15% triggers a "Warning".

3. Related Party Transactions (RPT) — Manual Check Guide

Since RPT data is buried in Annual Reports and not available in structured scraped data, the system provides a clear manual verification guide: check the Annual Report's "Notes to Accounts" for Related Party Disclosures. Red flags include loans to promoter-linked private entities exceeding 5% of Total Assets, or purchases/sales exceeding 10% of Revenue without clear commercial justification.

4. Auditor Stability Check

An untimely statutory auditor resignation is one of the highest-conviction leading indicators of material misstatement, undisclosed liabilities, or asset quality deterioration (as seen in several major Indian corporate accounting failures). The system checks BSE/NSE filings for any such announcements and flags them immediately.

How the Final Score Is Calculated

Each parameter is evaluated and assigned a status: Pass (100% weight), Moderate (50% weight), or Fail (0% weight). Weighted scores are then summed and normalised to 100. The final verdict is:

• Score ≥ 70 → Strong Multibagger Candidate: Stock meets most elite criteria. Shortlist for deep qualitative due diligence.
• Score 45–69 → Watch Carefully: Mixed signals. Monitor closely, await confirmation before committing capital.
• Score below 45 → High Risk — Exercise Caution: Multiple critical criteria failing. Significant downside risk.

How Eictovision Automates This for You

Building this framework manually would require opening 10+ data sources, downloading annual reports, calculating CAGRs in Excel, and cross-referencing shareholding patterns — a process that takes experienced analysts several hours per stock. Eictovision runs the entire Eicto Original Score automatically and instantly for every stock you visit, using real data pulled directly from financial statements. No spreadsheets. No manual calculations. Institutional-grade analysis at your fingertips.

Disclaimer: This is a quantitative screening model and not SEBI-registered financial advice. Always read the latest Annual Report, DRHP, and SEBI filings before making any investment decision.