Investors Shouldn't Overlook The Favourable Returns On Capital At ASK Automotive (NSE:ASKAUTOLTD)

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. That's why when we briefly looked at ASK Automotive's (NSE:ASKAUTOLTD) ROCE trend, we were very happy with what we saw.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

Understanding Return On Capital Employed (ROCE)

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. To calculate this metric for ASK Automotive, this is the formula:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.23 = ₹3.7b ÷ (₹23b - ₹6.8b) (Based on the trailing twelve months to September 2025).

Therefore, ASK Automotive has an ROCE of 23%. In absolute terms that's a great return and it's even better than the Auto Components industry average of 13%.

See our latest analysis for ASK Automotive

Above you can see how the current ROCE for ASK Automotive compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for ASK Automotive .

How Are Returns Trending?

ASK Automotive deserves to be commended in regards to it's returns. The company has consistently earned 23% for the last five years, and the capital employed within the business has risen 136% in that time. With returns that high, it's great that the business can continually reinvest its money at such appealing rates of return. If ASK Automotive can keep this up, we'd be very optimistic about its future.

What We Can Learn From ASK Automotive's ROCE

In summary, we're delighted to see that ASK Automotive has been compounding returns by reinvesting at consistently high rates of return, as these are common traits of a multi-bagger. And given the stock has only risen 4.5% over the last year, we'd suspect the market is beginning to recognize these trends. That's why it could be worth your time looking into this stock further to discover if it has more traits of a multi-bagger.

If you'd like to know more about ASK Automotive, we've spotted 4 warning signs, and 1 of them is significant.

If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning high returns on equity.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.