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Classic Value Investors

Low EV/EBITDA

Low EV/EBITDA is a Classic Value Investors screen. It checks every NSE-listed stock against 2 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

Enterprise value divided by EBITDA is the standard cross-sector, capital-structure-neutral valuation multiple used in M&A and institutional equity research. By including debt in the numerator (EV = market cap + net debt), it answers the question a buyer of the entire business would ask: what am I paying for the operating cash generation, regardless of how the capital structure is arranged? Adding back depreciation to EBIT makes the multiple comparable across capital-heavy and capital-light sectors — a cement plant and a software company can be compared on EV/EBITDA in a way that EV/EBIT cannot fairly achieve. An EV/EBITDA below 10x with a market cap above 100 Cr identifies businesses available at significant discounts to their private market value.

The rule, step by step

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

EV/EBITDA Valuation

  • EV/EBITDA is available
  • EV/EBITDA < 10

Relative Cheapness (EV/EBIT Fallback)

Described in the philosophy; not a pass/fail condition in the current rule

Hard excludes

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

Ranked by EV/EBITDA, lowest first.

The figures it uses

EV/EBITDA

Used in a condition
Formula
Enterprise value ÷ EBITDA, where enterprise value = market cap + total debt − cash; uses EBIT × 1.15 when EBITDA is missing
Input fields
market_cap, total debt, cash, ebitda, ebit
Source of record
Upstox · public historical candles, NSE_EQ|{ISIN} (no auth)FinEdge · /api/v1/daily-quotes/{symbol} (fallback)FinEdge · /api/v1/financials/{symbol}?statement_code=pl&period=annualFinEdge · /api/v1/financials/{symbol}?statement_code=bs&period=annualFinEdge · /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

Market Cap

Hard exclude input
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

What each figure means

EV/EBITDA

Enterprise value divided by EBITDA. EV = market capitalisation + total debt - cash and cash equivalents. EBITDA = EBIT + depreciation and amortisation, where depreciation is sourced from the cash flow statement (FinEdge statement_code=cf). If depreciation is unavailable, falls back to EV/EBIT (documented in screener output). Screen threshold: below 10.

Below 10x EV/EBITDA is a widely used threshold for identifying cheap businesses — it implies the company can theoretically pay off its entire enterprise value in under 10 years from EBITDA alone. For capital-heavy businesses (manufacturing, infrastructure, real estate), EBITDA is a better proxy for operating cash flow than EBIT because depreciation is a large non-cash charge that does not reflect current cash outflow. The fallback to EV/EBIT is documented transparently in each output record — users can filter on availability of EBITDA vs EBIT computation.

Low is better

EV/EBIT

Enterprise value divided by EBIT. EV = market capitalisation + total debt - cash and cash equivalents. EBIT sourced from FinEdge income statement; for banks, EBIT is undefined (no finance costs field) and this metric is null. Used as primary metric when depreciation is unavailable, and as a companion metric otherwise.

EV/EBIT is the primary fallback when FinEdge does not provide a depreciation figure for a given stock. It is also a useful companion metric for capital-light businesses (technology, financial services excluding banks, FMCG) where depreciation is small and the gap between EV/EBIT and EV/EBITDA is narrow. When both metrics are available, a large gap between them signals high depreciation — typical of capital-heavy sectors where EV/EBITDA is the more appropriate primary metric.

Low is better

Enterprise Value (₹ Cr)

Market capitalisation plus total debt minus cash and cash equivalents, expressed in crore rupees. Market cap from current price; debt and cash from the most recent annual balance sheet (FinEdge statement_code=bs). Screen also enforces market cap above 100 Cr as a separate size filter.

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.

  • EV/EBITDA is available—
  • EV/EBITDA < 10—

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

  • 5-day IC -0.050 · signal date 2026-10-14 · n 4447
  • 22-day IC -0.042 · signal date 2026-09-12 · n 3840

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.

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Rule version 1.0.0

Questions

How is this screen calculated?
Each stock is tested against 2 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.