Before investing in a stock, it is important to understand the financials of the company. One of the metrics that should be looked at is the Return on capital employed (ROCE).
The ratio helps to understand how well a company is generating profits from its capital as it is put to use. In other words, it shows how efficiently the company uses its capital to generate returns.
Here are four multibagger stocks which have a high ROCE:
Tata Elxsi Limited
The shares of Tata Elxsi Limited were up by 2.5% and closed at Rs 9,542 on Monday. In the last five days, the stock has shot up by 10.04% and in a month it has gained approximately 19%.
The stock has given a multibagger return of 123.56% as it surged up from Rs 4,268 per share in August 2021 to the current levels. In the last five years, the stock price has gained more than 1,088%.
In Q1FY23, the Tata group company earned a total revenue of Rs 725 Crores up from Rs 558 crores which it earned the year ago. Its net profit for the period stood at Rs 184 crores up from Rs 113 Crores in Q1FY22.
The company has a market capitalization of Rs 59,506 crores and has a Return on capital employed (ROCE) of 34.33%.
Tata Elxsi is amongst the world’s leading providers of design and technology services across industries including Automotive, Media, Communications, and Healthcare.
Bharat Dynamics Limited
The shares of Bharat Dynamics Limited scaled by more than 4.4% and closed at Rs 861 on Monday. In a month the stock has gained more than 22%.
A year ago the shares of the company were trading at Rs 391 levels. Since then it has delivered a multibagger return of 120% to climb up to the current levels.
The quarterly results of the company are yet to be announced. On a yearly basis, the company reported total revenue of Rs 2,817 crores up from Rs 1,913 crores the year before. In the period, their net profit stood at Rs 499 crores up from Rs 257 crores.
The company has a market capitalization of Rs 15,830 crores and has a Return on capital employed (ROCE) of 18.75%.
Bharat Dynamics is a Government of India Enterprise that is engaged in the manufacturing of guided missiles and allied defence equipment.
Schaeffler India Limited
The shares of Schaeffler India scaled by 0.6% and closed at Rs 2,844 on Monday. In a month the stock has gained more than 19%.
A year ago the shares of the company were trading at Rs 1,341 levels. Since then it has delivered a multibagger return of 111% to climb up to the current levels.
In Q1FY23, the company earned a total revenue of Rs 1,748 Crores up from Rs 1,232 crores which it earned the year ago. Its net profit for the period stood at Rs 225 crores up from Rs 128 Crores in Q1FY22.
The company has a market capitalization of Rs 44,101 crores and has a Return on capital employed (ROCE) of 22.83%.
It is engaged in the development, manufacturing, and distribution of high-precision roller and engine systems and transmission components, clutch systems, and related machine-building manufacturing activities.
Gujarat Narmada Valley Fertilizers & Chemicals (GNFC)
The shares of the company gained 0.12% and closed at Rs 772 on Monday. In a month the stock has shot up by approximately 23%.
The stock has delivered a multibagger return of 111% as it climbed up from Rs 365 in August last year to the current levels.
The quarterly results of the company are yet to be announced. On a yearly basis, the company reported total revenue of Rs 8,642 crores up from Rs 5,128 crores the year before. In the period, their net profit stood at Rs 1,703 crores up from Rs 689 crores.
The company has a market capitalization of Rs 12,006 crores and has a Return on capital employed (ROCE) of 24.57%
The state government-owned company operates businesses mainly in the Industrial Chemicals and Fertilizers segments apart from having a small presence in IT services.
Written by – Anoushka Roy
Disclaimer
The content in this news article is not investment advice. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
