Only 4 mid caps pass Raamdeo Agrawal's magic '25-25-25' rule

Summary: Few investors in India command Raamdeo Agrawal’s kind of stock-picking pedigree. So, we used his timeless investing framework—ROCE above 25 per cent, profit growth above 25 per cent and valuation below 25x—to spot mid caps that blend all three together. Only four names made the cut. Find them below. When it comes to spotting wealth creators early, few investors command the kind of street cred that Raamdeo Agrawal does. As the co-founder and chairman of Motilal Oswal Financial Services, Agrawal has built his investing empire on an unyielding commitment to deep research, disciplined frameworks and long-term conviction. Among his many investing mantras, one stands out for its elegant simplicity: the ‘Magic 25-25-25 rule’. What’s the magic about it? It’s a quick way to zero in on companies that combine three rare qualities—efficiency, growth and value. Agrawal looks for companies that deliver: Return on capital employed (ROCE) above 25 per cent: A sign of strong capital efficiency and allocation. Profit growth above 25 per cent: Proof of robust business momentum. P/E ratio below 25: To ensure the stock is not overpriced. How we found those that pass the muster It’s a high bar to clear. Most companies can ace one or two of these metrics, but very few tick all three boxes. So we decided to look for those rare few that do. Using Value Research’s Stock Screener, we filtered the mid-cap universe for the following: Five-year average ROCE: More than 25 per cent Five-year annual EPS growth: More than 25 per cent P/E ratio: Less than 25 times trailing earnings. The results threw up a handful of names: just four mi