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Classic Value Investors

Peter Lynch GARP

Peter Lynch GARP is a Classic Value Investors screen. It checks every NSE-listed stock against 4 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

Peter Lynch, who managed the Magellan Fund to 29.2% annual returns from 1977 to 1990, championed investing in companies you understand that are growing earnings at 15-25% per year but are available at a price-to-earnings-to-growth (PEG) ratio below 1. His insight was that the PE ratio alone is meaningless without reference to the growth rate: a company growing at 25% per year is cheap at a PE of 20 (PEG = 0.8) while a company growing at 5% is expensive at a PE of 10 (PEG = 2.0). His additional requirement of low debt (D/E < 0.5) screens out companies that are manufacturing their earnings growth through financial leverage rather than genuine operating strength. Lynch called these 'fast growers' — the category that produced his best returns.

The rule, step by step

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

Earnings Growth

  • EPS CAGR (5Y) > 0

Growth-Adjusted Valuation

  • P/E > 0
  • P/E ÷ EPS CAGR (5Y) < 1

Balance Sheet Safety

  • Debt/Equity < 0.5

Hard excludes

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

Ranked by P/E ÷ EPS CAGR (5Y), lowest first.

The figures it uses

EPS CAGR (5Y)

Used in a condition
Formula
EPS ((Latest ÷ value 5 years earlier)^(1/5) − 1) × 100, both values positive
Input fields
eps
Source of record
FinEdge · /api/v1/financials/{symbol}?statement_code=pl&period=annual
Corporate actions
Adjusted for corporate actions before use
Refresh
Recomputed nightly (06:30 IST job); rows older than 3 days are excluded from screens

P/E

Used in a condition
Formula
Close ÷ latest annual EPS, only when EPS is positive
Input fields
close, eps
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=annual
Corporate actions
Adjusted for corporate actions before use
Refresh
Recomputed nightly (06:30 IST job); rows older than 3 days are excluded from screens

Debt/Equity

Used in a condition
Formula
Total debt ÷ total equity from the latest annual balance sheet; a company reporting zero debt has a ratio of 0; none is given when the debt figure is unknown or equity is not positive
Input fields
total debt, total equity
Source of record
FinEdge · /api/v1/financials/{symbol}?statement_code=bs&period=annual
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

EPS CAGR (5 Years, %)

Compound annual growth rate of earnings per share over the past 5 fiscal years. Lynch required 15-25% EPS growth for a fast grower.

High is better

PEG Ratio (PE ÷ EPS CAGR)

Price-to-Earnings ratio divided by the 5-year EPS CAGR. A PEG below 1 means you are paying less than 1 year of PE multiple for each percentage point of annual growth — Lynch's definition of cheap.

Low is better

Debt-to-Equity Ratio

Total debt divided by total equity. Lynch required D/E below 0.5.

Lynch was explicit about this: a fast grower with heavy debt is a 'leveraged buyout pretending to be a growth company.' The 0.5 threshold ensures the growth is operating-driven, not debt-amplified.

Low is better

Try the rule

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

  • EPS CAGR (5Y) > 0—
  • P/E > 0—
  • P/E ÷ EPS CAGR (5Y) < 1—
  • Debt/Equity < 0.5—

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 -0.032 · signal date 2026-10-14 · n 4447
  • 22-day IC -0.011 · 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.

Run this screen

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Rule version 1.0.0

Questions

How is this screen calculated?
Each stock is tested against 4 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.