Returns At Giriraj Civil Developers (NSE:GIRIRAJ) Are On The Way Up

If you're looking for a multi-bagger, there's a few things to keep an eye out 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. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at Giriraj Civil Developers (NSE:GIRIRAJ) and its trend of ROCE, we really liked what we saw.

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Return On Capital Employed (ROCE): What Is It?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on Giriraj Civil Developers is:

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

0.13 = ₹245m ÷ (₹3.0b - ₹1.1b) (Based on the trailing twelve months to March 2025).

So, Giriraj Civil Developers has an ROCE of 13%. In absolute terms, that's a pretty standard return but compared to the Construction industry average it falls behind.

View our latest analysis for Giriraj Civil Developers

Historical performance is a great place to start when researching a stock so above you can see the gauge for Giriraj Civil Developers' ROCE against it's prior returns. If you'd like to look at how Giriraj Civil Developers has performed in the past in other metrics, you can view this free graph of Giriraj Civil Developers' past earnings, revenue and cash flow.

What The Trend Of ROCE Can Tell Us

Investors would be pleased with what's happening at Giriraj Civil Developers. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 13%. The amount of capital employed has increased too, by 578%. So we're very much inspired by what we're seeing at Giriraj Civil Developers thanks to its ability to profitably reinvest capital.

In another part of our analysis, we noticed that the company's ratio of current liabilities to total assets decreased to 36%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. This tells us that Giriraj Civil Developers has grown its returns without a reliance on increasing their current liabilities, which we're very happy with.

What We Can Learn From Giriraj Civil Developers' 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 Giriraj Civil Developers has. Since the stock has returned a staggering 1,357% to shareholders over the last three years, it looks like investors are recognizing these changes. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

One more thing: We've identified 3 warning signs with Giriraj Civil Developers (at least 1 which is concerning) , and understanding these would certainly be useful.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.

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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.