Narayana Hrudayalaya's (NSE:NH) Returns On Capital Are Heading Higher

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base 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. So on that note, Narayana Hrudayalaya (NSE:NH) looks quite promising in regards to its trends of return on capital.

We've discovered 1 warning sign about Narayana Hrudayalaya. View them for free.

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

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Narayana Hrudayalaya, this is the formula:

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

0.18 = ₹11b ÷ (₹73b - ₹12b) (Based on the trailing twelve months to March 2025).

So, Narayana Hrudayalaya has an ROCE of 18%. In absolute terms, that's a satisfactory return, but compared to the Healthcare industry average of 14% it's much better.

Check out our latest analysis for Narayana Hrudayalaya

Above you can see how the current ROCE for Narayana Hrudayalaya compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for Narayana Hrudayalaya .

What Does the ROCE Trend For Narayana Hrudayalaya Tell Us?

Investors would be pleased with what's happening at Narayana Hrudayalaya. The data shows that returns on capital have increased substantially over the last five years to 18%. Basically the business is earning more per dollar of capital invested and in addition to that, 165% more capital is being employed now too. So we're very much inspired by what we're seeing at Narayana Hrudayalaya thanks to its ability to profitably reinvest capital.

In Conclusion...

All in all, it's terrific to see that Narayana Hrudayalaya is reaping the rewards from prior investments and is growing its capital base. And a remarkable 537% total return over the last five 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.

Narayana Hrudayalaya does have some risks though, and we've spotted 1 warning sign for Narayana Hrudayalaya that you might be interested in.

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.

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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.