Apollo Hospitals Enterprise (NSE:APOLLOHOSP) Is Experiencing Growth In Returns On Capital

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. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at Apollo Hospitals Enterprise (NSE:APOLLOHOSP) and its trend of ROCE, we really liked what we saw.

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What Is 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. Analysts use this formula to calculate it for Apollo Hospitals Enterprise:

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

0.15 = ₹24b ÷ (₹207b - ₹46b) (Based on the trailing twelve months to June 2025).

Therefore, Apollo Hospitals Enterprise has an ROCE of 15%. In absolute terms, that's a satisfactory return, but compared to the Healthcare industry average of 12% it's much better.

View our latest analysis for Apollo Hospitals Enterprise

In the above chart we have measured Apollo Hospitals Enterprise's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Apollo Hospitals Enterprise for free.

What Does the ROCE Trend For Apollo Hospitals Enterprise Tell Us?

Apollo Hospitals Enterprise is displaying some positive trends. The data shows that returns on capital have increased substantially over the last five years to 15%. The amount of capital employed has increased too, by 79%. So we're very much inspired by what we're seeing at Apollo Hospitals Enterprise thanks to its ability to profitably reinvest capital.

The Bottom Line

In summary, it's great to see that Apollo Hospitals Enterprise can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. In light of that, we think it's worth looking further into this stock because if Apollo Hospitals Enterprise can keep these trends up, it could have a bright future ahead.

On a separate note, we've found 1 warning sign for Apollo Hospitals Enterprise you'll probably want to know about.

While Apollo Hospitals Enterprise 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.