Returns At Kamdhenu Ventures (NSE:KAMOPAINTS) Are On The Way Up

Explore Kamdhenu Ventures's Fair Values from the Community and select yours

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look 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, Kamdhenu Ventures (NSE:KAMOPAINTS) looks quite promising in regards to its trends of return on capital.

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Understanding Return On Capital Employed (ROCE)

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. The formula for this calculation on Kamdhenu Ventures is:

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

0.06 = ₹108m ÷ (₹2.6b - ₹855m) (Based on the trailing twelve months to June 2025).

Therefore, Kamdhenu Ventures has an ROCE of 6.0%. Ultimately, that's a low return and it under-performs the Chemicals industry average of 12%.

Check out our latest analysis for Kamdhenu Ventures

Historical performance is a great place to start when researching a stock so above you can see the gauge for Kamdhenu Ventures' ROCE against it's prior returns. If you'd like to look at how Kamdhenu Ventures has performed in the past in other metrics, you can view this free graph of Kamdhenu Ventures' past earnings, revenue and cash flow.

So How Is Kamdhenu Ventures' ROCE Trending?

The fact that Kamdhenu Ventures is now generating some pre-tax profits from its prior investments is very encouraging. About five years ago the company was generating losses but things have turned around because it's now earning 6.0% on its capital. In addition to that, Kamdhenu Ventures is employing 1,054,495% more capital than previously which is expected of a company that's trying to break into profitability. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, both common traits of a multi-bagger.

One more thing to note, Kamdhenu Ventures has decreased current liabilities to 32% of total assets over this period, which effectively reduces the amount of funding from suppliers or short-term creditors. This tells us that Kamdhenu Ventures has grown its returns without a reliance on increasing their current liabilities, which we're very happy with.

The Bottom Line On Kamdhenu Ventures' ROCE

To the delight of most shareholders, Kamdhenu Ventures has now broken into profitability. However the stock is down a substantial 74% in the last year so there could be other areas of the business hurting its prospects. Regardless, we think the underlying fundamentals warrant this stock for further investigation.

If you'd like to know about the risks facing Kamdhenu Ventures, we've discovered 2 warning signs that you should be aware of.

While Kamdhenu Ventures 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.