Rudrabhishek Enterprises' (NSE:REPL) Returns On Capital Are Heading Higher

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So on that note, Rudrabhishek Enterprises (NSE:REPL) looks quite promising in regards to its trends of return on capital.

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 Rudrabhishek Enterprises:

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

0.13 = ₹122m ÷ (₹1.3b - ₹339m) (Based on the trailing twelve months to March 2022).

Thus, Rudrabhishek Enterprises has an ROCE of 13%. By itself that's a normal return on capital and it's in line with the industry's average returns of 13%.

View our latest analysis for Rudrabhishek Enterprises

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you want to delve into the historical earnings, revenue and cash flow of Rudrabhishek Enterprises, check out these free graphs here.

So How Is Rudrabhishek Enterprises' ROCE Trending?

The trends we've noticed at Rudrabhishek Enterprises are quite reassuring. The data shows that returns on capital have increased substantially over the last five years to 13%. The amount of capital employed has increased too, by 61%. So we're very much inspired by what we're seeing at Rudrabhishek Enterprises thanks to its ability to profitably reinvest capital.

The Key Takeaway

All in all, it's terrific to see that Rudrabhishek Enterprises is reaping the rewards from prior investments and is growing its capital base. And a remarkable 324% total return over the last three years tells us that investors are expecting more good things to come in the future. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

If you'd like to know more about Rudrabhishek Enterprises, we've spotted 3 warning signs, and 1 of them is a bit unpleasant.

While Rudrabhishek Enterprises 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.