Return on Capital Employed (ROCE) is a profitability metric that defines a company’s ability to effectively utilize its funds, which includes both debt and equity.
ROCE is calculated by dividing earnings before interest and taxes (EBIT) by the amount of capital employed. Capital employed in a ROCE calculation refers to the total assets of the Company after all liabilities have been deducted.
A higher ROCE ratio is beneficial since it indicates the company’s ability to achieve higher returns per rupee invested. The ROCE ratio is useful for comparing companies in the same industry or sector. This is critical in determining which company spends its capital most efficiently in order to create a healthy return.
Here are three Renewable Energy stocks with ROCEs of up to 33%
KPI Green Energy Ltd
KPI Green Energy shares were trading at Rs 918 a share on Tuesday, up 0.90 percent from the previous close price and the company has a market capitalization of Rs 3,302 crore.
The company’s Profitability ratios are more favorable conditions, with a return on capital employed of 10.68 percent, a return on equity of 21.25 percent, and a net profit margin of 17.02 percent.
The company’s revenue has increased by 56 percent year on year, from Rs 122 crore in Q1FY23 to Rs 189 crore in Q1FY24. During the same period, Net profit increased by 50 percent from Rs 22 crore to Rs 33 crore.
KPI Green Energy Ltd is engaged in the implementation and management of solar power projects and captive power producers under the Solarism brand.
K.P. Energy Ltd.
K.P. Energy shares were trading at Rs 586.95 a share on Tuesday, up 2.45 percent from the previous close price and with a market capitalization of Rs 1,296 crore.
Profitability ratios are in a strong position, with a return on capital employed of 33.30 percent, a return on equity of 34.15 percent, and a net profit margin of 10.28 percent.
The company’s revenue has declined by 10 percent year on year, from Rs 124 crore in Q1FY23 to Rs 112 crore in Q1FY24. During the same period, Net profit increased by 66 percent from Rs 9 crore to Rs 15 crore.
K.P. Energy Limited is engaged in the operation of solar and wind energy projects in India. The company engages throughout the development process of wind farms, right from conceptualization until the commissioning of the project.
BF Utilities Ltd
BF Utilities shares were trading at Rs 614 a share on Tuesday, up 1.57 percent from the previous close price and the company has a market capitalization of Rs 2,306 crore.
The company’s return on capital is employed at 24.66 percent, And the company’s margins are in a strong position with a net profit margin at 33.80 percent, and its operating margin at 60.19 percent.
The company’s revenue has increased by 36 percent year on year, from Rs 194 crore in Q1FY23 to Rs 263 crore in Q1FY24. During the same period, Net profit declined by 26 percent from Rs 81 crore to Rs 60 crore.
BF Utilities Ltd is engaged in power generation through windmill technology. The company is also in the business activities of Wind Energy, and Infrastructure.
Written by Omkar Chitnis
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