Investors Shouldn't Overlook TAJGVK Hotels & Resorts' (NSE:TAJGVK) Impressive Returns On Capital

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount 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. Speaking of which, we noticed some great changes in TAJGVK Hotels & Resorts' (NSE:TAJGVK) returns on capital, so let's have a look.

Return On Capital Employed (ROCE): What Is It?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on TAJGVK Hotels & Resorts is:

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

0.21 = ₹1.3b ÷ (₹7.6b - ₹1.2b) (Based on the trailing twelve months to March 2023).

So, TAJGVK Hotels & Resorts has an ROCE of 21%. In absolute terms that's a great return and it's even better than the Hospitality industry average of 9.9%.

Check out our latest analysis for TAJGVK Hotels & Resorts

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're interested in investigating TAJGVK Hotels & Resorts' past further, check out this free graph of past earnings, revenue and cash flow.

What Does the ROCE Trend For TAJGVK Hotels & Resorts Tell Us?

TAJGVK Hotels & Resorts' ROCE growth is quite impressive. The figures show that over the last five years, ROCE has grown 133% whilst employing roughly the same amount of capital. So it's likely that the business is now reaping the full benefits of its past investments, since the capital employed hasn't changed considerably. The company is doing well in that sense, and it's worth investigating what the management team has planned for long term growth prospects.

The Bottom Line On TAJGVK Hotels & Resorts' ROCE

In summary, we're delighted to see that TAJGVK Hotels & Resorts has been able to increase efficiencies and earn higher rates of return on the same amount of capital. Considering the stock has delivered 23% to its stockholders over the last five years, it may be fair to think that investors aren't fully aware of the promising trends yet. Given that, we'd look further into this stock in case it has more traits that could make it multiply in the long term.

If you want to continue researching TAJGVK Hotels & Resorts, you might be interested to know about the 1 warning sign that our analysis has discovered.

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.