A company’s return on equity (ROE) and return on capital employed are two important metrics that are used to gauge a company’s operational efficiency and profitability. These are some of the most important ratios that investors consider before investing in a company.
The ROE considers profits generated per rupee of equity employed in a company, whereas ROCE is the primary measure of how efficiently a company utilizes all the capital available to it to generate additional profit. Ideally, the ROE of a company should be at least 15 percent, while the ROCE should be at least 20 percent.
Here are a few small-cap stocks with a high ROE and ROCE:
Ksolves India
Ksolves India is engaged in software development, enterprise solutions, consulting & providing IT solutions to companies across sectors such as Real Estate, E-commerce, Finance, Telecom and Healthcare and so on. It is a small-cap company with a market capitalization of ₹ 1,329 crores and its shares were trading at ₹ 1,101 apiece on Wednesday.
The company reported an ROE of 110.44 percent and an ROCE of 138.72 percent in the financial year 2022-23. In the past year, the company’s share price increased by 160 percent to deliver multibagger returns.
Anand Rathi Wealth
Anand Rathi Wealth is an AMFI-registered mutual fund distributor, a leading non-banking wealth solutions firm and a stockbroker in India. It is a small-cap company with a market capitalization of ₹ 4,233 crores and its shares were trading at ₹ 1026 apiece on Wednesday.
The company reported an ROE of 35.96 percent and a ROCE of 45.75 percent in the financial year 2022-23. In the past year, the company’s share price increased by 66 percent and by 84 percent in the past five years.
Jyoti Resins and Adhesives
Jyoti Resins And Adhesives manufactures synthetic resin adhesives under the brand name EURO 7000, which is now the second largest-selling wood adhesive brand in India in the retail segment. It is a small-cap company with a market capitalization of ₹ 1,664 crores and its shares were trading at ₹ 1401 apiece on Wednesday.
The company reported an ROE of 43.82 percent and an ROCE of 57.58 percent in the financial year 2022-23. In the past year, the company’s share price increased by 76 percent and by a massive 5115 percent in the past five years.
Written by Simran Bafna
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