Returns At Sylvan Plyboard (India) (NSE:SYLVANPLY) Are On The Way Up

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. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. Speaking of which, we noticed some great changes in Sylvan Plyboard (India)'s (NSE:SYLVANPLY) returns on capital, so let's have a look.

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What Is 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. Analysts use this formula to calculate it for Sylvan Plyboard (India):

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

0.15 = ₹195m ÷ (₹2.6b - ₹1.3b) (Based on the trailing twelve months to March 2025).

Thus, Sylvan Plyboard (India) has an ROCE of 15%. On its own, that's a standard return, however it's much better than the 8.7% generated by the Forestry industry.

See our latest analysis for Sylvan Plyboard (India)

Historical performance is a great place to start when researching a stock so above you can see the gauge for Sylvan Plyboard (India)'s ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Sylvan Plyboard (India).

So How Is Sylvan Plyboard (India)'s ROCE Trending?

Investors would be pleased with what's happening at Sylvan Plyboard (India). Over the last five years, returns on capital employed have risen substantially to 15%. Basically the business is earning more per dollar of capital invested and in addition to that, 56% more capital is being employed now too. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

Another thing to note, Sylvan Plyboard (India) has a high ratio of current liabilities to total assets of 51%. This can bring about some risks because the company is basically operating with a rather large reliance on its suppliers or other sorts of short-term creditors. Ideally we'd like to see this reduce as that would mean fewer obligations bearing risks.

Our Take On Sylvan Plyboard (India)'s ROCE

All in all, it's terrific to see that Sylvan Plyboard (India) is reaping the rewards from prior investments and is growing its capital base. And since the stock has fallen 34% over the last year, there might be an opportunity here. That being the case, research into the company's current valuation metrics and future prospects seems fitting.

One more thing: We've identified 3 warning signs with Sylvan Plyboard (India) (at least 1 which is potentially serious) , and understanding these would certainly be useful.

While Sylvan Plyboard (India) 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.