Speciality Restaurants' (NSE:SPECIALITY) Returns On Capital Are Heading Higher

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding 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, Speciality Restaurants (NSE:SPECIALITY) looks quite promising in regards to its trends of return on capital.

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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. Analysts use this formula to calculate it for Speciality Restaurants:

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

0.052 = ₹236m ÷ (₹5.4b - ₹829m) (Based on the trailing twelve months to June 2025).

Thus, Speciality Restaurants has an ROCE of 5.2%. Ultimately, that's a low return and it under-performs the Hospitality industry average of 7.9%.

View our latest analysis for Speciality Restaurants

Historical performance is a great place to start when researching a stock so above you can see the gauge for Speciality Restaurants' ROCE against it's prior returns. If you're interested in investigating Speciality Restaurants' past further, check out this free graph covering Speciality Restaurants' past earnings, revenue and cash flow.

The Trend Of ROCE

The fact that Speciality Restaurants is now generating some pre-tax profits from its prior investments is very encouraging. The company was generating losses five years ago, but now it's earning 5.2% which is a sight for sore eyes. Not only that, but the company is utilizing 63% more capital than before, but that's to be expected from a company 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.

Our Take On Speciality Restaurants' ROCE

Overall, Speciality Restaurants gets a big tick from us thanks in most part to the fact that it is now profitable and is reinvesting in its business. Since the stock has returned a staggering 237% 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 Speciality Restaurants can keep these trends up, it could have a bright future ahead.

On a separate note, we've found 3 warning signs for Speciality Restaurants you'll probably want to know about.

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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.