Returns At Nuvoco Vistas (NSE:NUVOCO) Appear To Be Weighed Down

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. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. Although, when we looked at Nuvoco Vistas (NSE:NUVOCO), it didn't seem to tick all of these boxes.

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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 Nuvoco Vistas, this is the formula:

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

0.053 = ₹6.8b ÷ (₹182b - ₹53b) (Based on the trailing twelve months to June 2025).

So, Nuvoco Vistas has an ROCE of 5.3%. In absolute terms, that's a low return but it's around the Basic Materials industry average of 6.1%.

See our latest analysis for Nuvoco Vistas

In the above chart we have measured Nuvoco Vistas' 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 Nuvoco Vistas for free.

What The Trend Of ROCE Can Tell Us

The returns on capital haven't changed much for Nuvoco Vistas in recent years. The company has employed 32% more capital in the last five years, and the returns on that capital have remained stable at 5.3%. This poor ROCE doesn't inspire confidence right now, and with the increase in capital employed, it's evident that the business isn't deploying the funds into high return investments.

Our Take On Nuvoco Vistas' ROCE

As we've seen above, Nuvoco Vistas' returns on capital haven't increased but it is reinvesting in the business. And with the stock having returned a mere 6.7% in the last three years to shareholders, you could argue that they're aware of these lackluster trends. As a result, if you're hunting for a multi-bagger, we think you'd have more luck elsewhere.

If you want to continue researching Nuvoco Vistas, you might be interested to know about the 1 warning sign that our analysis has discovered.

While Nuvoco Vistas isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.