Shareholders Would Enjoy A Repeat Of Cemindia Projects' (NSE:ITDCEM) Recent Growth In Returns

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Speaking of which, we noticed some great changes in Cemindia Projects' (NSE:ITDCEM) returns on capital, so let's have 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 Cemindia Projects is:

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

0.35 = ₹7.0b ÷ (₹65b - ₹45b) (Based on the trailing twelve months to June 2025).

Therefore, Cemindia Projects has an ROCE of 35%. In absolute terms that's a great return and it's even better than the Construction industry average of 15%.

Check out our latest analysis for Cemindia Projects

Above you can see how the current ROCE for Cemindia Projects compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Cemindia Projects for free.

What Does the ROCE Trend For Cemindia Projects Tell Us?

The trends we've noticed at Cemindia Projects are quite reassuring. The data shows that returns on capital have increased substantially over the last five years to 35%. The amount of capital employed has increased too, by 75%. So we're very much inspired by what we're seeing at Cemindia Projects thanks to its ability to profitably reinvest capital.

On a side note, Cemindia Projects' current liabilities are still rather high at 69% of total assets. This effectively means that suppliers (or short-term creditors) are funding a large portion of the business, so just be aware that this can introduce some elements of risk. While it's not necessarily a bad thing, it can be beneficial if this ratio is lower.

In Conclusion...

All in all, it's terrific to see that Cemindia Projects is reaping the rewards from prior investments and is growing its capital base. Since the stock has returned a staggering 1,584% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Cemindia Projects can keep these trends up, it could have a bright future ahead.

Before jumping to any conclusions though, we need to know what value we're getting for the current share price. That's where you can check out our FREE intrinsic value estimation for ITDCEM that compares the share price and estimated value.

Cemindia Projects is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

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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.