10 stocks that ace Pat Dorsey's profitability test

Legendary investor Pat Dorsey believed that profitable businesses are defined not just by high returns, but by their ability to sustain those returns over time. According to him, two metrics to spot such great businesses are consistently high return on equity (ROE) and strong free cash flow year after year. Inspired by this framework, we screened for companies that have delivered an ROE above 15 per cent and free cash flow-to-revenue above 5 per cent in each of the last 10 years—markers of enduring profitability and operational discipline. This stringent screen gave us 27 names. From these, we have listed the top 10 by market capitalisation in our table. Company Median ROE (%) Median FCF / Revenue (%) TCS 39.3 18.4 Infosys 25.8 15.0 Hindustan Unilever 71.4 13.7 ITC 25.9 20.6 HCL Technologies 23.8 14.1 Nestle India 58.0 14.8 Bajaj Auto 22.9 11.9 Hindustan Zinc 24.5 32.7 LTIMindtree 34.0 12.8 Marico 37.6 12.3 Financials for FY15-24 FCF is free cash flow Company Stock Rating Quality Score Growth Score Valuation Score Momentum Score TCS 4 10 6 5 1 Infosys