The Return Trends At MRF (NSE:MRF) Look Promising

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. With that in mind, we've noticed some promising trends at MRF (NSE:MRF) so let's look a bit deeper.

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What Is Return On Capital Employed (ROCE)?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for MRF:

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

0.12 = ₹24b ÷ (₹296b - ₹90b) (Based on the trailing twelve months to June 2025).

Thus, MRF has an ROCE of 12%. That's a relatively normal return on capital, and it's around the 13% generated by the Auto Components industry.

Check out our latest analysis for MRF

In the above chart we have measured MRF's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for MRF .

So How Is MRF's ROCE Trending?

Investors would be pleased with what's happening at MRF. Over the last five years, returns on capital employed have risen substantially to 12%. The amount of capital employed has increased too, by 45%. So we're very much inspired by what we're seeing at MRF thanks to its ability to profitably reinvest capital.

The Bottom Line On MRF's ROCE

A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what MRF has. And a remarkable 163% total return over the last five years tells us that investors are expecting more good things to come in the future. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

While MRF looks impressive, no company is worth an infinite price. The intrinsic value infographic for MRF helps visualize whether it is currently trading for a fair price.

While MRF may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.