To find a multi-bagger stock, what are the underlying trends we should look for in a business? 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. That's why when we briefly looked at Thyrocare Technologies' (NSE:THYROCARE) ROCE trend, we were very happy with what we saw.
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. The formula for this calculation on Thyrocare Technologies is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.26 = ₹1.5b ÷ (₹6.9b - ₹1.2b) (Based on the trailing twelve months to June 2025).
So, Thyrocare Technologies has an ROCE of 26%. In absolute terms that's a great return and it's even better than the Healthcare industry average of 12%.
Check out our latest analysis for Thyrocare Technologies
In the above chart we have measured Thyrocare Technologies' 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 Thyrocare Technologies for free.
The Trend Of ROCE
In terms of Thyrocare Technologies' history of ROCE, it's quite impressive. The company has employed 47% more capital in the last five years, and the returns on that capital have remained stable at 26%. Returns like this are the envy of most businesses and given it has repeatedly reinvested at these rates, that's even better. If these trends can continue, it wouldn't surprise us if the company became a multi-bagger.
The Bottom Line On Thyrocare Technologies' ROCE
Thyrocare Technologies has demonstrated its proficiency by generating high returns on increasing amounts of capital employed, which we're thrilled about. However, over the last five years, the stock has only delivered a 40% return to shareholders who held over that period. So to determine if Thyrocare Technologies is a multi-bagger going forward, we'd suggest digging deeper into the company's other fundamentals.
Thyrocare Technologies does have some risks though, and we've spotted 1 warning sign for Thyrocare Technologies that you might be interested in.
Thyrocare Technologies 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.