Investing in the stock market works best when you follow one simple rule: avoid bad companies. Even a few loss-making stocks can hurt your portfolio returns. The good news is that you don’t need complicated strategies to protect yourself. Using a stock screener helps you quickly filter out weak companies and focus on the right ones.

Among the options available, Finology Ticker is considered one of the best stock screeners in India. It allows you to apply ready-made filters across 5,000+ listed companies, enabling you to identify quality businesses in minutes. Instead of following market noise, you can use a systematic process.

Here are three simple yet powerful screening queries you can directly run on Finology Ticker’s screener to improve your stock selection.

1. The Cash Flow Test: Check if Profits Are Real

Profits on paper don’t always mean profits in reality. A company can report high earnings but fail to generate actual cash. This is a significant warning sign. To avoid such cases, filter companies that consistently show both positive profits and cash flows.

Screening Query (Paste in Finology Ticker Screener):

CFO Y1 > 0 AND CFO Y2 > 0 AND CFO Y3 > 0 AND FCFF 3yr Avg > 0 AND FCFF 3yr CAGR > 8 AND Operating Margin Q1 > 10 AND GPM Y1 > GPM Y2 AND Net Profit Margin Q1 > Net Profit Margin Q2 AND Net Profit 5yr CAGR > 8 AND MCAP > 1000

Why it works: Cash flow confirms whether profits are genuine. Before its collapse, DHFL had reported a profit of over ₹1,900 crore in FY18, but its cash flow was negative. This mismatch was a big red flag. Running this screen on Finology Ticker could have highlighted the risk early.

2. The Promoter Confidence Filter: Following the “Skin-in-the-Game” Logic

Promoters or founders know their business best. If they own a significant stake and keep it unpledged, it shows strong confidence in the company’s future. On the other hand, high promoter pledging has been linked to corporate failures.

Screening Query (Paste in Finology Ticker Screener):

Promoter Holding Q1 > Promoter Holding Q2 AND Promoter Holding Q1 > 50 AND Promoter Pledging Q1 < 1 AND ROCE 5yr Avg > 20 AND Debt to Equity Y1 < 1.5 AND Interest Coverage Y1 > 3

Why it works: When promoters hold more than a 50% stake and avoid pledging, their interests align with those of retail investors. In contrast, companies like Future Retail and Cox & Kings had high pledging, which later turned into trouble.

In Q3FY25, Steel Exchange India saw promoter pledging rise from ~61% to ~86% in just one quarter. NRB Bearings reported pledging around 91%, and its stock dropped ~28% in the same period (Latest pledging of NRB Bearings dropped to ~66%). Even large companies like IndusInd Bank saw a rise in promoter pledging of ~5.4% in December 2024. These are precisely the red flags this filter is designed to catch.

On the positive side, some companies are making an effort to clean up. For example, Bharat Forge reduced its pledging from ~7.1% to nearly 0% between Q3 FY24 and Q4 FY24. Such actions usually send a strong positive signal to investors.

With the best stock screener, such as Finology Ticker, you can track these changes quarter by quarter without manually digging through reports.

3. The Return Ratios Power Screen: Focusing on High-Efficiency Businesses

Return ratios, such as ROE (Return on Equity) and ROCE (Return on Capital Employed), indicate how efficiently a company utilises its resources. High and consistent returns often indicate strong business fundamentals.

Screening Query (Paste in Finology Ticker Screener):

ROE 5yr Avg > 20 AND ROCE 5yr Avg > 25 AND ROA 5yr Avg > 15 AND MCAP > 1000 AND Debt to Equity Y1 < 1 AND Interest Coverage Y1 > 1 AND Net Profit 5yr CAGR > 12 AND Net sales 5yr CAGR > 15

Why it works: Companies like Asian Paints and Pidilite have historically maintained ROCE above 25%, reflecting efficient operations and brand strength. Running this screen on Finology Ticker can help you shortlist such capital-efficient businesses directly.

Smarter Stock Selection with a Screener

Good investing is about following a process, not chasing tips. By using these three ready-to-use queries on Finology Ticker Screener, you can:

• Eliminate companies with weak cash flows.
• Avoid businesses where promoters lack confidence.
• Find consistent wealth creators with high return ratios.

This approach is systematic, data-driven, and repeatable. That is why many investors call Finology Ticker the best stock screener in India.

If you are serious about avoiding bad companies and focusing on strong businesses, start using these screens today. The best part is you can run them for free on Finology Ticker’s screener and instantly get a list of matching stocks.

Finology is a SEBI-registered investment advisor firm with registration number: INA000012218.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.