“The rationale to screen the resultant list of stocks for a minimum pre-tax RoCE of at least 15 percent in FY18 is to identify firms that would at least meet the cost of capital,” said the report. After a steep correction in valuations of small and midcaps in the last one year—25 percent fall in BSE Smallcap index on P/B compared to 9 percent dip in Nifty—valuations have become attractive for some small-caps. Using a combination of top-down qualitative and quantitative parameters, Ambit Capital has identified high-quality businesses in midcaps with sound fundamentals that are trading at attractive valuations to historical averages. The brokerage house highlights 16 stocks that clear their cut-off of 15 percent RoCE, cash flow quality and growth, Piotroski’s ‘F’ score and filters on accounting and greatness. Ambit Capital arrived at a list of 16 companies that clear the filters with an average FY18 RoCE of 24 percent and 6-year cumulative CFO/EBITDA of 105 percent. Alth...