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Return on Equity (ROE) is a metric that expresses a company’s annual return (net income) as a percentage of the value of its total shareholders’ equity.  

The figure displays the firm’s capacity to convert equity investments into profits and is the total return on equity capital. In other words, it calculates the profits for every rupee of shareholders’ equity. 

Because it combines the income statement and the balance sheet, where net income or profit is compared to shareholders’ equity, return on equity is a two-part ratio in its derivation. 

Multibagger Stocks are those that have returned over 100% in the past year, meaning if you invested Rs. 1 lakh into a multibagger, it should have made your position worth Rs. 2 lakh or more. 

Here are 3 Multibagger Engineering Stocks with High ROE:

Rishi Laser Ltd:

Rishi Laser manufactures and sells fabricated sheet metal components and machines in India. The company has an ROE of 39%. Rishi Laser has a market cap of Rs. 53 crore and has returned 187% in the last year and over 777% in the last 3 year period. 

Rishi Laser is locked in at Rs. 57.42 on Wednesday, hitting its 2% upper circuit from its previous close. It is 7% away from its 52 week high and 2%, 70% respectively from its 20 day and 200 day moving averages. The company has a Piotroski F score of 8, which indicates a strong financial book. 

Rishi Laser has also reported growth in its financials over the last few FYs. Revenue has grown from Rs. 75  crore in FY21 to Rs. 117 crore in FY22 to Rs. 134 crore in FY23. During the same periods, Net profits grew from a loss of Rs. 2 crore to Rs. 0.3 crore to Rs. 5 crore. Net Margins have also seen significant accretion from -2.96% in FY21 to 3.68% in FY23, indicating increase of 665 bps. 

Ion Exchange (India) Ltd:

Ion Exchange together with its subsidiaries, provides water treatment and environment management solutions in India and internationally. The company has an ROE of 26%. Ion Exchange has a market cap of Rs. 7,729 crore and has returned 142% in the last year and over 184% in the last 3 year period. 

Ion Exchange is trading at Rs. 527 on Wednesday, flat from its previous close. It is 14% away from its 52 week high and at its 20 day, 39% 200 day moving average. The company has a Piotroski F score of 7, which indicates a strong financial book. 

Ion Exchange has also reported growth in its financials over the last few FYs. Revenue has grown from Rs. 1,450 crore in FY21 to Rs. 1,577 crore in FY22 to Rs. 1,990 crore in FY23. During the same periods, Net profits grew from Rs. 143 crore to Rs. 162 crore to Rs. 197 crore in FY23. Net Margins have been stable from 9.8%.

Balu Forge Industries Ltd:

Balu Forge manufactures and sells crankshafts in India and internationally. The company has an ROE of 26%. Balu Forge has a market cap of Rs. 1,987 crore and has returned 198% in the last year and over 120% in the last 6 month period. 

Balu Forge is trading at Rs. 204.65 on Wednesday, up 0.6% from its previous close. It is 11% away from its 52 week high and 2%, 71% respectively from its 20 day and 200 day moving averages. 

Balu Forge has also reported growth in its financials over the last few FYs. Revenue has grown from Rs. 142  crore in FY21 to Rs. 286 crore in FY22 to Rs. 386 crore in FY23. During the same periods, Net profits grew from Rs. 8 crore to Rs. 30 crore to Rs. 48 crore in FY23. Net Margins have also seen significant accretion from 5.63% in FY21 to 12.35% in FY23, indicating increase of 680 bps. 

Written by Sandeep R

Disclaimer

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