We Think HBL Engineering (NSE:HBLENGINE) Might Have The DNA Of A Multi-Bagger

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. And in light of that, the trends we're seeing at HBL Engineering's (NSE:HBLENGINE) look very promising so lets take a look.

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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. The formula for this calculation on HBL Engineering is:

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

0.28 = ₹4.3b ÷ (₹20b - ₹4.3b) (Based on the trailing twelve months to June 2025).

Thus, HBL Engineering has an ROCE of 28%. In absolute terms that's a great return and it's even better than the Electrical industry average of 18%.

See our latest analysis for HBL Engineering

Historical performance is a great place to start when researching a stock so above you can see the gauge for HBL Engineering's ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of HBL Engineering.

What The Trend Of ROCE Can Tell Us

We like the trends that we're seeing from HBL Engineering. Over the last five years, returns on capital employed have risen substantially to 28%. The amount of capital employed has increased too, by 95%. So we're very much inspired by what we're seeing at HBL Engineering thanks to its ability to profitably reinvest capital.

The Bottom Line

All in all, it's terrific to see that HBL Engineering is reaping the rewards from prior investments and is growing its capital base. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

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

High returns are a key ingredient to strong performance, so check out our free list ofstocks earning high returns on equity with solid balance sheets.

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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.