When evaluating fundamentally strong companies, two key metrics often stand out: Return on Equity (ROE) and Return on Capital Employed (ROCE). ROE measures how efficiently a company generates profits from its shareholders’ equity, while ROCE indicates how effectively it uses both equity and debt to generate returns. Generally, an ROE above 15 percent and an ROCE above 12-15 percent are considered healthy.
Following are a few undervalued stocks with high ROE and ROCE of more than 40 percent to keep in your watchlist:
Shilchar Technologies Limited
With a market cap of Rs. 6,399.6 crores, the stock moved up by nearly 6.3 percent on BSE, rising to Rs. 5,730.3 on Friday. In terms of financial ratios, Shilchar Tech has reported a RoE of 52.8 percent and ROCE of 71.1 percent, while maintaining a debt-free balance sheet. Further, the stock is currently trading at a P/E of 41.4, compared to the industry average of 45.7.
In Q4 FY25, the company has witnessed a growth of nearly 121 percent YoY in revenue from operations to Rs. 232 crores, accompanied by a net profit growth of around 120 percent YoY to Rs. 55 crores.
Shilchar Technologies Limited is engaged in the business of manufacturing “distribution & power transformers” as well as “electronics & telecommunication transformers.”
Websol Energy System Limited
With a market cap of Rs. 5,591 crores, the stock moved up by nearly 1 percent on BSE, rising to Rs. 1,330 on Friday. In terms of financial ratios, Websol Energy has reported a RoE of 80.2 percent and ROCE of 59.2 percent, with the debt-to-equity ratio standing at 0.55. Further, the stock is currently trading at a P/E of 37.2, compared to the industry average of 45.7.
In Q4 FY25, the company have witnessed an impressive growth of nearly 592 percent YoY in revenue from operations to Rs. 173 crores, accompanied by a net profit growth to Rs. 48 crores from a loss of Rs. 59 crores in Q4 FY24. Websol Energy System Limited is engaged in the business of manufacturing solar photovoltaic cells and modules.
Shakti Pumps (India) Limited
With a market cap of Rs. 11,258.3 crores, the stock moved up by nearly 1 percent on BSE, rising to Rs. 935.5 on Friday. In terms of financial ratios, Shakti Pumps has reported a RoE of 42.6 percent and ROCE of 55.3 percent, with the debt-to-equity ratio standing at 0.14. Further, the stock is currently trading at a P/E of 27.9, compared to the industry average of 45.8.
In Q4 FY25, the company has witnessed a growth of nearly 9 percent YoY in revenue from operations to Rs. 665 crores, accompanied by a net profit growth of around 22 percent YoY to Rs. 110 crores.
Shakti Pumps (India) Limited (SPIL) is engaged in manufacturing solar pumps, energy-efficient stainless-steel submersible pumps, pressure booster pumps, pump motors, and other products and spare parts. It is the only company that manufactures a wide range of products for solar pump installation in-house, including variable frequency drives, structures, motors, inverters, and so on.
Alpex Solar Limited
With a market cap of Rs. 2,697 crores, the stock moved up by nearly 4 percent on NSE, rising to Rs. 1,111 on Friday In terms of financial ratios, Alpex Solar has reported a RoE of 48.1 percent and ROCE of 51.8 percent, with the debt-to-equity ratio standing at 0.36. Further, the stock is currently trading at a P/E of 31.6, compared to the industry average of 45.7.
In Q4 FY25, the company have witnessed a growth of nearly 170 percent YoY in revenue from operations to Rs. 327 crores, accompanied by a net profit growth of around 483 percent YoY to Rs. 35 crores. Alpex Solar Limited is primarily engaged in the business of manufacturing solar modules and assembling solar pumps in India.
Oriana Power Limited
With a market cap of Rs. 4,305.6 crores, the stock moved up by nearly 1 percent on NSE, rising to Rs. 2,169 on Friday. In terms of financial ratios, Oriana Power has reported a RoE of 48.3 percent and ROCE of 42.3 percent, with the debt-to-equity ratio standing at 0.53. Further, the stock is currently trading at a P/E of 27.3, compared to the industry average of 45.7.
In H2 FY25, the company have witnessed a growth of nearly 97 percent YoY in revenue from operations to Rs. 628 crores, accompanied by a net profit growth of around 124 percent YoY to Rs. 110 crores.
Oriana Power Limited operates across various segments of the power industry, encompassing power generation, engineering, procurement, and construction (EPC) of power projects, as well as operation and maintenance services. In addition, the company offers consultancy expertise in manufacturing, operations, and maintenance of power projects.
Written by Shivani Singh
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