Return on Capital Employed (ROCE) is a profitability measure that indicates a company’s ability to effectively utilize its capital, 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 greater ROCE ratio is advantageous since it describes the company’s potential to earn more returns per rupee invested. The ROCE ratio can be used to compare organizations within the same industry or sector. This is important in deciding which company spends its funds most effectively in order to generate a healthy return.
Here are three Pharma stocks with ROCEs of up to 24% that are below Rs 500.
Gufic Biosciences Ltd
Gufic Biosciences Ltd shares were trading at Rs 286.70 a share on Wednesday, down 0.90 percent from the previous close price and the company has a market capitalization of Rs 2,784 crore.
The company’s Profitability ratios are more favorable conditions, with a return on capital employed of 20.06 percent, a return on equity of 22.91 percent, and a net profit margin of 11.54 percent.
The company’s revenue has increased by 18 percent year on year, from Rs 165 crore in Q1FY23 to Rs 195 crore in Q1FY24. During the same period, Net profit declined slightly by 5 percent from Rs 21 crore to Rs 20 crore.
Gufic Biosciences Limited is a pharmaceutical, medicinal, chemical, and botanical product manufacturer.
Laurus Labs Ltd
On Wednesday, Laurus Labs shares were trading at Rs 391.25 a share, down 1.26 percent from the previous close price, The company has a market capitalization of Rs 21,085 crore.
Laurus Labs Profitability ratios are in a better position with a return on capital employed at 24.37 percent, the return on equity stands at 19.56 percent, and the company’s net profit margin stands at 31.18 percent.
The company’s revenue has declined by 23 percent year on year, from Rs 1,538 crore in Q1FY23 to Rs 1,181 crore in Q1FY24. During the same period, Net profit decreased by 88 percent from Rs 252 crore to Rs 28 crore.
Laurus Labs Pvt. Ltd. develops, manufactures, and supplies pharmaceutical ingredients and associated intermediates to the worldwide pharmaceutical business. It also provided drug discovery, medicinal chemistry, lead optimization, process development, scale-up and process optimization, safety and hazard evaluation, formulation development, and analytical chemistry services.
Granules India Ltd
Granules India Ltd shares were trading at Rs 355.40 a share on Wednesday, down 0.04 percent from the previous close price and with a market capitalization of Rs 8,633 crore.
Profitability ratios are more favorable, with a return on capital employed of 24.04 percent, a return on equity of 18.22 percent, and a net profit margin of 11.44 percent.
The company’s revenue has declined by 3 percent year on year, from Rs 1,019 crore in Q1FY23 to Rs 985 crore in Q1FY24. During the same period, Net profit declined by 63 percent from Rs 127 crore to Rs 47 crore.
Granules India Ltd is a vertically integrated manufacturer of active pharmaceutical ingredients (APIs) and pharmaceutical formulation intermediates (PFIs).
Written by Omkar Chitnis
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