Three rules I read every annual report by.
EPS is the verdict on the income statement. EVA is the verdict on capital. Both can disagree for years. The capital line wins eventually.
Rule 01
The bar is not the index. It is the company's own cost of capital.
Beating the Nifty is a relative game. Beating WACC is a survival game. Indian listed cohort runs WACC roughly 11 to 14 pct depending on sector beta and leverage. That number is the hurdle. Not the index. Not the peer median.
Rule 02
Growth without spread is wealth destroyed politely with bigger numbers.
A capex announcement is a question, not an answer. Did the new project earn above the cost of capital it consumed? Sales line up. Capital base up faster. ROCE down. Spread minus three. The annual report still reads "record year."
Rule 03
Read EVA, not EPS, when judging capital allocation.
EPS rises the moment a company borrows at 9 and earns 10 on the borrowed rupee. EVA only rises when the earned rate beats WACC. Two reports. Same quarter. One counts the rupee that arrived. The other asks if that rupee earned what it cost.
Closer
Earnings up. Capital destroyed. Both true. The income statement counts the rupee that arrived. The cost of capital is the rupee that should have. The gap is the verdict.
Read the cost-of-capital module on the Learn hub.
rupeecase.com/learn