Gujarat Ambuja Exports (NSE:GAEL) Will Be Hoping To Turn Its Returns On Capital Around

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. Although, when we looked at Gujarat Ambuja Exports (NSE:GAEL), it didn't seem to tick all of these boxes.

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What Is Return On Capital Employed (ROCE)?

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. To calculate this metric for Gujarat Ambuja Exports, this is the formula:

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

0.073 = ₹2.4b ÷ (₹38b - ₹5.3b) (Based on the trailing twelve months to September 2025).

Thus, Gujarat Ambuja Exports has an ROCE of 7.3%. In absolute terms, that's a low return and it also under-performs the Food industry average of 13%.

See our latest analysis for Gujarat Ambuja Exports

In the above chart we have measured Gujarat Ambuja Exports' 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 Gujarat Ambuja Exports .

What Can We Tell From Gujarat Ambuja Exports' ROCE Trend?

On the surface, the trend of ROCE at Gujarat Ambuja Exports doesn't inspire confidence. Over the last five years, returns on capital have decreased to 7.3% from 19% five years ago. Meanwhile, the business is utilizing more capital but this hasn't moved the needle much in terms of sales in the past 12 months, so this could reflect longer term investments. It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line.

What We Can Learn From Gujarat Ambuja Exports' ROCE

To conclude, we've found that Gujarat Ambuja Exports is reinvesting in the business, but returns have been falling. Investors must think there's better things to come because the stock has knocked it out of the park, delivering a 106% gain to shareholders who have held over the last five years. However, unless these underlying trends turn more positive, we wouldn't get our hopes up too high.

If you want to know some of the risks facing Gujarat Ambuja Exports we've found 2 warning signs (1 shouldn't be ignored!) that you should be aware of before investing here.

While Gujarat Ambuja Exports 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.