11 stocks that pass Warren Buffett's capital efficiency test

Warren Buffett has long championed the power of businesses that generate high and consistent return on equity (ROE), demonstrating solid capital discipline. For Buffett, a company's ability to deploy capital efficiently without unnecessary leverage is a key indicator of its long-term potential. Hence, we set out to find companies that fit the bill. We used three filters: 10-year average ROE above 20 per cent At least 15 per cent ROE in every year over the last decade Annual diluted earnings per share (EPS) growth of over 20 per cent over FY19-24 This combination of steady returns and earnings momentum ensured we filter out short-term performers and find long-term compounders that have built intrinsic value year after year. 15 stocks made the cut. We have listed 11 in the table that are four/five-star rated in our Stock Ratings. Companies 10-year avg ROE 5-year diluted EPS growth (pa%) Stock Rating ICICI Securities 65.1 27.9% 5 Fine Organic Industries 30.2 24.8% 5 SBI Cards And Payment Services 26.5 21.8% 5 Abbott India 27.5 21.7% 5 Share India Securities 32.6 69.4% 4 Mankind Pharma 24.9