Shareholders Would Enjoy A Repeat Of Bikaji Foods International's (NSE:BIKAJI) Recent Growth In Returns

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. And in light of that, the trends we're seeing at Bikaji Foods International's (NSE:BIKAJI) look very promising so lets take a look.

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. To calculate this metric for Bikaji Foods International, this is the formula:

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

0.27 = ₹3.5b ÷ (₹15b - ₹2.2b) (Based on the trailing twelve months to June 2024).

Therefore, Bikaji Foods International has an ROCE of 27%. In absolute terms that's a great return and it's even better than the Food industry average of 13%.

Check out our latest analysis for Bikaji Foods International

In the above chart we have measured Bikaji Foods International's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Bikaji Foods International .

How Are Returns Trending?

Investors would be pleased with what's happening at Bikaji Foods International. The data shows that returns on capital have increased substantially over the last five years to 27%. The amount of capital employed has increased too, by 142%. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

The Bottom Line On Bikaji Foods International's ROCE

All in all, it's terrific to see that Bikaji Foods International is reaping the rewards from prior investments and is growing its capital base. Since the stock has returned a solid 89% to shareholders over the last year, it's fair to say investors are beginning to recognize these changes. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

While Bikaji Foods International looks impressive, no company is worth an infinite price. The intrinsic value infographic for BIKAJI helps visualize whether it is currently trading for a fair price.

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.