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Classic Value Investors

Free Cash Flow Yield

Free Cash Flow Yield is a Classic Value Investors screen. It checks every NSE-listed stock against 3 conditions computed from nightly data, after excluding heavily pledged promoters and very small market caps. This page explains the rule, each figure and its source. It lists no stocks and is not advice.

What it does and why

Free Cash Flow (operating cash flow minus capital expenditure) is the cash a business generates for its owners after maintaining and investing in its asset base. Unlike reported earnings, FCF is substantially harder to manipulate: a company can recognize revenue aggressively and book accounting profits, but it cannot fake actual cash deposited in its bank account. FCF yield — free cash flow divided by market capitalisation — is the return on investment a patient owner would theoretically earn if the company distributed all its free cash as dividends. It is arguably the most rigorous measure of the 'cash-on-cash' return available in public market data, and is the foundation of the Buffett approach to valuing businesses.

The rule, step by step

A stock must satisfy every condition below. Conditions are grouped under the pillar they test.

Cash Generation

  • Free Cash Flow > 0
  • Market Cap > 0

FCF-Based Valuation

  • Free Cash Flow ÷ Market Cap ≥ 0.05

Hard excludes

  • Promoter pledge above 30% of the promoter's holding
  • Market cap below ₹500 crore
Passes the screen

Ranked by Free Cash Flow ÷ Market Cap, highest first.

The figures it uses

Free Cash Flow

Used in a condition
Formula
Operating cash flow + capex (capex is a negative outflow); abstains when capex is positive or missing alongside a sale line
Input fields
cashFlowsFromOperatingActivities, purchaseOfFixed&IntangibleAssets
Source of record
FinEdge · /api/v1/financials/{symbol}?statement_code=cf&period=annual
Refresh
Recomputed nightly (06:30 IST job); rows older than 3 days are excluded from screens

Market Cap

Used in a condition
Formula
Close × paid-up equity shares ÷ 10,000,000 (₹ crore)
Input fields
close, paidUpEquityShares
Source of record
Upstox · public historical candles, NSE_EQ|{ISIN} (no auth)FinEdge · /api/v1/daily-quotes/{symbol} (fallback)FinEdge · /api/v1/shareholdings/summary/{symbol}?period=quarterly
Corporate actions
Adjusted for corporate actions before use
Refresh
Recomputed nightly (06:30 IST job); rows older than 3 days are excluded from screens

Promoter Pledge

Hard exclude input
Formula
Pledged shares as a share of the promoter's own holding: pledgedSharesPct ÷ promoter holding × 100; blank when the quarter is not listed
Input fields
pledgedSharesPct, promoter holding
Source of record
FinEdge · /api/v1/shareholdings/summary/{symbol}?period=quarterlyFinEdge · /api/v1/shareholdings/pattern/{symbol}?period=quarterly
Refresh
Recomputed nightly (06:30 IST job); rows older than 3 days are excluded from screens

What each figure means

Free Cash Flow (₹ Cr)

Operating cash flow minus capital expenditure. Positive FCF means the company generates more cash from operations than it spends maintaining and growing its asset base.

High is better

FCF Yield (%)

Free cash flow divided by market capitalisation, expressed as a percentage. A 5% FCF yield means for every ₹100 invested, the company generates ₹5 in free cash per year.

High is better

FCF CAGR (3 Years, %)

Compound annual growth rate of free cash flow over 3 fiscal years. Positive CAGR means cash generation is improving over time.

High is better

Try the rule

Type hypothetical values to see which conditions they satisfy. These are not real stocks and nothing here is stored.

  • Free Cash Flow > 0—
  • Market Cap > 0—
  • Free Cash Flow ÷ Market Cap ≥ 0.05—

Enter values to begin

How sensitive is it?

How many stocks pass if this threshold were set differently. Counts only; no stocks are named.

A worked example

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Evidence

What the harness measured

no_verified_figureNot yet tested

We have not measured this screen yet, so there is no record to explain.

Live monitoring

Not yet testable — 0 of 6 points needed to chart a rolling information coefficient.

  • 5-day IC -0.016 · signal date 2026-10-14 · n 4447

This is a historical, statistical measurement produced by FINOME TECHNOLOGIES PVT LTD's research harness on past data. It is not a prediction, and past results do not indicate future results. The universe is today's Nifty 500 constituents, so the sample is affected by survivorship bias. It describes how a screen's selections behaved in the past and does not constitute investment advice or a recommendation.

Run this screen

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Rule version 1.0.0

Questions

How is this screen calculated?
Each stock is tested against 3 conditions using figures computed from exchange prices and company filings, adjusted for corporate actions. The rule is versioned; this page shows version 1.0.0.
How often does the screen update?
The figures are recomputed once each trading day after the nightly compute. A stock whose figures are more than three days old is left out rather than shown stale.
Is this investment advice?
No. This is educational material describing a screening method. It does not recommend any security and does not consider your circumstances.
Educational use only — GoQuant is a research tool. This page explains a screening method and is not a recommendation. Investment advice is provided by FINOME TECHNOLOGIES PVT LTD (AltQube), SEBI-registered Investment Adviser, registration no. INA000018373, under a signed advisory agreement and after a risk profile. Past performance is not indicative of future results.