All scores matter: Why you should not invest based on a single score

All it takes is one missing ingredient to ruin a dish. You can get everything right, down to the most minute details. But if you forget the salt, all your efforts are rendered mute. The equity markets often work in similar ways. Take the example of these four companies with high quality scores: Bajaj Consumer Care , Castrol India , GM Breweries and Gillette India . Each of them has maintained a quality score of 10 (the highest score in our rating framework) consistently over the past five years. For the uninitiated, a high quality score implies that these companies have consistently displayed robust efficiency (high ROE and ROCE) and maintained a healthy balance sheet. Bitter returns Three of four companies gave negative returns despite high quality scores Company Quality score Growth score Valuation score 5Y returns (% pa) Bajaj Consumer Care 10 5 5 -10.2 Gillette India 10 6 3