Returns On Capital Are Showing Encouraging Signs At DUDigital Global (NSE:DUGLOBAL)

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. So on that note, DUDigital Global (NSE:DUGLOBAL) looks quite promising in regards to its trends of return on capital.

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What Is 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. Analysts use this formula to calculate it for DUDigital Global:

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

0.10 = ₹110m ÷ (₹1.2b - ₹105m) (Based on the trailing twelve months to September 2025).

Therefore, DUDigital Global has an ROCE of 10%. That's a relatively normal return on capital, and it's around the 12% generated by the Professional Services industry.

View our latest analysis for DUDigital Global

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

What Does the ROCE Trend For DUDigital Global Tell Us?

DUDigital Global has recently broken into profitability so their prior investments seem to be paying off. The company was generating losses five years ago, but now it's earning 10% which is a sight for sore eyes. In addition to that, DUDigital Global is employing 5,149% more capital than previously which is expected of a company that's trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance.

On a related note, the company's ratio of current liabilities to total assets has decreased to 9.0%, which basically reduces it's funding from the likes of short-term creditors or suppliers. This tells us that DUDigital Global has grown its returns without a reliance on increasing their current liabilities, which we're very happy with.

The Bottom Line

Overall, DUDigital Global gets a big tick from us thanks in most part to the fact that it is now profitable and is reinvesting in its business. Astute investors may have an opportunity here because the stock has declined 52% in the last three years. That being the case, research into the company's current valuation metrics and future prospects seems fitting.

One more thing: We've identified 3 warning signs with DUDigital Global (at least 1 which is a bit unpleasant) , and understanding these would certainly be useful.

While DUDigital Global isn't earning the highest return, check out this free list of companies that are 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.