There's Been No Shortage Of Growth Recently For Bikaji Foods International's (NSE:BIKAJI) Returns On Capital

If you're looking for a multi-bagger, there's a few things to keep an eye out for. 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. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So on that note, Bikaji Foods International (NSE:BIKAJI) looks quite promising in regards to its trends of return on capital.

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

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. The formula for this calculation on Bikaji Foods International is:

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

0.19 = ₹2.2b ÷ (₹14b - ₹2.9b) (Based on the trailing twelve months to September 2023).

Therefore, Bikaji Foods International has an ROCE of 19%. In absolute terms, that's a satisfactory return, but compared to the Food industry average of 14% it's much better.

Check out our latest analysis for Bikaji Foods International

Above you can see how the current ROCE for Bikaji Foods International compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free report for Bikaji Foods International.

So How Is Bikaji Foods International's ROCE 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 four years to 19%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 105%. 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

A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Bikaji Foods International has. And with a respectable 71% awarded to those who held the stock over the last year, you could argue that these developments are starting to get the attention they deserve. In light of that, we think it's worth looking further into this stock because if Bikaji Foods International can keep these trends up, it could have a bright future ahead.

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

While Bikaji Foods International 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.

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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.