Hello Friends,
Today I will like to share with all of you a dissertation I have been working on since sometime as part of my graduation from PGP, Research Analysis from National Institute of Securities Markets (NISM).
After diving deep into three decades of Motilal Oswal’s legendary Wealth Creation Studies (WC01-WC29), one truth emerges crystal clear: creating massive wealth in Indian equities isn’t about luck, timing, or following the crowd. It’s about understanding and applying five non-negotiable principles that have remained constant since 1991.
Some names appear so frequently in these studies that they’ve become synonymous with wealth creation itself. ITC leads the pack with appearances in 18 studies, while HDFC appears 16 times followed by Reliance Industries, HDFC Bank, and TCS each appearing 14 studies. These aren’t random coincidences—they represent the DNA of enduring wealth creation.
The Five Pillars That Never Fail
1. Quality of Returns (ROE/ROCE Above 15-20%)
The most predictive metric isn’t revenue growth or market share—it’s Return on Equity and Return on Capital Employed. Companies delivering consistent ROE above 15-20% have repeatedly emerged as wealth creators across every market cycle. But here’s the twist: incremental ROCE (returns on fresh capital deployed) often matters more than historical ROE. This separates companies that can scale efficiently from those that peak at smaller sizes.
2. Valuation Discipline - The “Payback Ratio” Revolution
Perhaps the most practical tool to emerge from these studies is the Payback Ratio: Market Cap ÷ 5-year forward profits. When this ratio is ≤1, you’ve identified a potential multibagger. The logic is bulletproof—if a company’s current market value can be “paid back” by five years of future profits, you’re buying growth at a reasonable price.
3. Market Leadership - “The Big Get Bigger”
Time and again, India’s biggest wealth creators have been number one or number two players in their categories. This isn’t just about size—it’s about sustainable competitive advantages, pricing power, and the ability to consolidate market share during downturns. The axiom “the big get bigger” has been validated across three decades of data.
4. Management Integrity - The Non-Negotiable Filter
WC24 made this explicit: no matter how attractive the business or valuation, exit at the first sign of dishonesty. The studies introduced forensic tools like OCF/PAT ratios (Operating Cash Flow to Profit After Tax) to detect earnings manipulation. Companies with OCF/PAT consistently above 1.0 demonstrate genuine earnings quality.
5. Sectoral Probability - Consumer & Financial Dominance
Certain sectors have shown secular dominance across three decades: consumer businesses and financial services. These sectors benefit from India’s structural story—rising incomes, urbanization, and financialization of savings. While cyclical sectors like commodities and infrastructure deliver episodic wealth creation, they rarely sustain it across long horizons.
The QGLP Framework: Your Investment Compass
The studies evolved a powerful acronym: QGLP (Quality, Growth, Longevity, Price). This framework encapsulates the essential filters:
Quality: Persistent high ROE and strong governance
Growth: Sustainable earnings CAGR drivers (aim for 20%+)
Longevity: Competitive Advantage Period (CAP) - how long can excess returns last?
Price: Entry valuation using tools like Payback Ratio
Modern Adaptations: From “Atoms to Bits”
WC26 introduced a crucial insight for today’s digital economy: wealth creation is migrating from physical businesses to digital ones. “Bits” businesses scale faster than “Atoms” because they’re frictionless and benefit from network effects. For digital companies, traditional P/E ratios become less relevant—instead, use Price/Sales ÷ Growth (PSG) ratios and DCF models.
The “Bruised Blue Chips” Strategy
The most recent study (WC29) unveiled a contrarian opportunity: “Bruised Blue Chips”. These are established market leaders (top 50 by market cap) that have fallen 50%+ from their peaks. Unlike weak companies, bruised leaders almost never die—their mortality rate is near-zero. The payoff is asymmetric: they can fall 70-80% but offer 2-3x upside when they heal.
India’s Golden Decade: The Macro Picture
WC28 positioned the 2020s as India’s “Golden Decade”. Structural reforms (GST, IBC, RERA), digital infrastructure (UPI, Aadhaar), manufacturing push (PLI, China+1), and financialization of household savings create a multi-decade tailwind. The “big gets bigger” phenomenon has intensified, with the top 10 wealth creators contributing 72% of total wealth creation versus 50-60% earlier.
Key Thresholds to Remember
The studies validate specific quantitative thresholds:
EPS CAGR of 20%+
ROE above 15-20%
Incremental ROCE exceeding 20%
Payback Ratio ≤ 1
OCF/PAT ≥ 1 (consistent cash flow generation)
The Ultimate Lesson: “Buy Right, Sit Tight”
Perhaps the most powerful insight from 30 years of data: patience trumps timing. WC22’s theme “Buy Right, Sit Tight” showed that even large-cap companies deliver outstanding long-term returns if held patiently. The real driver of compounding isn’t market timing—it’s time in the market with quality businesses.
Practical Implementation
For investors seeking the next decade’s multibaggers, focus on:
Value Migration: Industries shifting from unorganized to organized, offline to online
Mid-to-Mega Stories: Companies ranked 50-250 by market cap climbing the ladder
Category Winners: Leaders in expanding markets with high entry barriers
Formalization Beneficiaries: Companies gaining from India’s digital and financial formalization
The Bottom Line
Thirty years of wealth creation studies reveal that consistent compounding in Indian equities results from the intersection of growth, quality, and governance—purchased with valuation discipline and held with conviction. While markets change, human nature and business fundamentals remain constant. These five pillars provide a timeless framework for identifying tomorrow’s wealth creators in India’s evolving capital markets.
The secret isn’t finding the next hot stock—it’s finding businesses that compound wealth through multiple cycles while you sleep. That’s the real wisdom from three decades of India’s wealth creation journey.
I learnt a lot from this exercise and it has made me a better trader and a better analyst. Specially because today I follow a CANSLIMistic approach to my personal investment journey and this resonates a lot with that approach.
The striking convergence between my dissertation findings from Motilal Oswal’s three-decade wealth creation journey and William O’Neil’s CANSLIM methodology isn’t coincidental. Both approaches, developed independently across different markets and timeframes, have identified remarkably similar patterns that separate sustainable wealth creators from temporary winners.
My research validates CANSLIM’s foundational principle with laser precision. MOSL’s consistent finding that companies delivering EPS CAGR exceeding 20% dominated wealth creation directly mirrors CANSLIM’s requirement for quarterly earnings growth of at least 25% year-over-year and annual earnings growth of 25%+ over recent years.
The beauty lies in the numbers: both methodologies independently arrived at nearly identical growth thresholds through empirical observation. O’Neil studied U.S. stock market winners dating back to 1953, while MOSL analyzed Indian markets from 1991-2024. Yet both concluded that sustainable wealth creators consistently deliver earnings growth in the 20-25%+ range.
The study adds sophistication by emphasizing incremental ROCE - the returns on fresh capital deployed. This refinement addresses a gap in traditional CANSLIM, where rapid earnings growth could mask deteriorating capital efficiency in scaling businesses.
CANSLIM’s “N” factor - new products, services, or management - finds perfect expression in MOSL’s findings about “New Catalysts” and value migration patterns. My research documented how companies like Reliance Industries repeatedly reinvented themselves (textiles → petrochemicals → telecom → digital), creating multiple wealth creation cycles through strategic pivots.
The WC26 theme “Atoms to Bits” represents exactly the kind of structural shift CANSLIM seeks to identify early. Companies transitioning from physical to digital business models - Zomato, Nykaa, Angel One - exemplify how new business models create multibagger opportunities, just as O’Neil identified in technology transitions of the 1990s.
CANSLIM’s emphasis on supply-demand dynamics and institutional sponsorship aligns perfectly with MOSL’s consistent finding that market leaders (No. 1 or No. 2 players) dominate wealth creation. My research shows this trend has intensified, with the top 10 wealth creators now contributing 72% of total wealth creation versus 50-60% earlier.
This validates O’Neil’s principle that market leaders outperform laggards, but adds the Indian insight that “the big get bigger” through consolidation, formalization, and scale advantages. The secular dominance of consumer and financial businesses reflects this pattern - established leaders use their moats to capture disproportionate share of growing markets.
Both methodologies recognize institutional backing as validation of business quality. CANSLIM explicitly screens for significant institutional ownership, while MOSL’s research shows how governance integrity and earnings quality attract institutional capital, creating a virtuous cycle.
My forensic tools - OCF/PAT ratios, promoter pledge analysis, related-party transaction scrutiny - represent sophisticated evolution of this principle. These metrics help identify companies that institutional investors can confidently support long-term, rather than just momentum-driven institutional participation.
O’Neil’s insistence on investing during bullish market conditions finds sophisticated expression in MOSL’s analysis of macro cycles - interest rates, profit-to-GDP ratios, liquidity cycles. My research shows how structural tailwinds (GST, digitization, formalization) create multi-year favorable environments for wealth creation, similar to how CANSLIM emphasizes riding secular bull markets.
The “Golden Decade” theme (WC28) represents precisely the kind of macro setup CANSLIM methodology seeks to exploit - structural reforms creating sustained favorable conditions for growth stocks.
While CANSLIM provides the foundational growth stock framework, my research adds critical refinements essential for emerging markets:
CANSLIM assumes reasonable governance standards in developed markets. MOSL’s “Management Integrity” pillar and my forensic tools address the concentrated promoter ownership and governance volatility specific to Indian markets.
While CANSLIM focuses on individual stock characteristics, MOSL adds the insight that certain sectors (consumer, financial) structurally benefit from India’s demographic and economic transition, creating higher base-rate probabilities for wealth creation.
CANSLIM traditionally uses P/E ratios, but MOSL’s innovations - Payback Ratio, PSG ratios for digital businesses, DCF for “Bits” companies - provide more nuanced valuation frameworks for different business models and growth stages.
The Synthesis: My CANSLIM-India Framework
The convergence suggests a powerful hybrid approach:
C: Current quarterly earnings growth (25%+ CANSLIM, 20%+ MOSL validation) ✓
A: Annual earnings growth (25%+ multi-year track record) ✓
N: New catalysts (Value Shift, Tech Adoption, Revenue Innovation) ✓
S: Supply/Demand dynamics (institutional sponsorship + market leadership) ✓
L: Leader/Laggard (No. 1-2 market position, “big gets bigger” trend) ✓
I: Institutional sponsorship (governance quality attracting institutions) ✓
M: Market direction (structural tailwinds, macro favorability) ✓
Plus Indian Enhancements:
Quality filters: ROE/ROCE consistency, incremental ROCE efficiency
Governance screens: OCF/PAT, forensic integrity checks
Sectoral probability: Consumer/financial structural advantages
Valuation discipline: Payback Ratio, adaptive metrics for business models
The Convergence
Both methodologies emphasize that sustainable wealth creation follows predictable patterns. Companies exhibiting CANSLIM characteristics in the Indian context, filtered through MOSL’s governance and sectoral probability lenses, represent the highest-conviction opportunities.
The magic happens when growth (CANSLIM) meets quality and governance (MOSL enhancement). Pure growth without governance integrity fails in Indian markets, while quality without growth provides insufficient returns. The intersection - high-quality, high-growth, well-governed companies in structurally advantaged sectors, purchased with valuation discipline - represents the sweet spot both methodologies ultimately target.
My dissertation provided me with the “CANSLIM-India” playbook, combining O’Neil’s growth stock principles with the governance rigor and sectoral insights essential for navigating Indian equity markets successfully. The 30-year empirical validation makes this synthesis incredibly powerful for identifying the next decade’s multibaggers.
This dissertation has given me more confidence on my framework which I discussed in my Technical Analysis Workshop.
I hope it adds value to your investment journey as well.
Rgds,
Ayush Agrawal
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