The Return Trends At Jayaswal Neco Industries (NSE:JAYNECOIND) Look Promising

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. So when we looked at Jayaswal Neco Industries (NSE:JAYNECOIND) and its trend of ROCE, we really liked what we saw.

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Understanding 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. To calculate this metric for Jayaswal Neco Industries, this is the formula:

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

0.17 = ₹7.9b ÷ (₹57b - ₹9.3b) (Based on the trailing twelve months to June 2025).

Therefore, Jayaswal Neco Industries has an ROCE of 17%. On its own, that's a standard return, however it's much better than the 13% generated by the Metals and Mining industry.

View our latest analysis for Jayaswal Neco 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'd like to look at how Jayaswal Neco Industries has performed in the past in other metrics, you can view this free graph of Jayaswal Neco Industries' past earnings, revenue and cash flow.

What Can We Tell From Jayaswal Neco Industries' ROCE Trend?

Jayaswal Neco Industries has recently broken into profitability so their prior investments seem to be paying off. About five years ago the company was generating losses but things have turned around because it's now earning 17% on its capital. Not only that, but the company is utilizing 263% more capital than before, but that's to be expected from a company trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance.

One more thing to note, Jayaswal Neco Industries has decreased current liabilities to 16% of total assets over this period, which effectively reduces the amount of funding from suppliers or short-term creditors. So this improvement in ROCE has come from the business' underlying economics, which is great to see.

In Conclusion...

To the delight of most shareholders, Jayaswal Neco Industries has now broken into profitability. 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 Jayaswal Neco Industries can keep these trends up, it could have a bright future ahead.

If you want to continue researching Jayaswal Neco Industries, you might be interested to know about the 2 warning signs that our analysis has discovered.

While Jayaswal Neco Industries 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.