Under The Bonnet, Manorama Industries' (NSE:MANORAMA) Returns Look Impressive

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. 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. Speaking of which, we noticed some great changes in Manorama Industries' (NSE:MANORAMA) returns on capital, so let's have a look.

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

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. The formula for this calculation on Manorama Industries is:

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

0.41 = ₹2.5b ÷ (₹10b - ₹4.1b) (Based on the trailing twelve months to September 2025).

So, Manorama Industries has an ROCE of 41%. In absolute terms that's a great return and it's even better than the Food industry average of 13%.

See our latest analysis for Manorama Industries

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 Manorama Industries' past further, check out this free graph covering Manorama Industries' past earnings, revenue and cash flow.

The Trend Of ROCE

Manorama Industries is displaying some positive trends. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 41%. Basically the business is earning more per dollar of capital invested and in addition to that, 342% more capital is being employed now too. So we're very much inspired by what we're seeing at Manorama Industries thanks to its ability to profitably reinvest capital.

One more thing to note, Manorama Industries has decreased current liabilities to 40% of total assets over this period, which effectively reduces the amount of funding from suppliers or short-term creditors. This tells us that Manorama Industries has grown its returns without a reliance on increasing their current liabilities, which we're very happy with. However, current liabilities are still at a pretty high level, so just be aware that this can bring with it some risks.

The Bottom Line On Manorama Industries' ROCE

All in all, it's terrific to see that Manorama Industries is reaping the rewards from prior investments and is growing its capital base. And a remarkable 490% total return over the last three years tells us that investors are expecting more good things to come in the future. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

Like most companies, Manorama Industries does come with some risks, and we've found 1 warning sign that you should be aware of.

Manorama Industries is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

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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.