Stock Analysis

Shareholders Are Optimistic That Basilic Fly Studio (NSE:BASILIC) Will Multiply In Value

NSEI:BASILIC
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If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount 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 Basilic Fly Studio's (NSE:BASILIC) ROCE trend, we were very happy with what we saw.

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Return On Capital Employed (ROCE): What Is It?

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 Basilic Fly Studio:

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

0.23 = ₹585m ÷ (₹3.1b - ₹548m) (Based on the trailing twelve months to March 2025).

Therefore, Basilic Fly Studio has an ROCE of 23%. That's a fantastic return and not only that, it outpaces the average of 4.9% earned by companies in a similar industry.

View our latest analysis for Basilic Fly Studio

roce
NSEI:BASILIC Return on Capital Employed July 11th 2025

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're interested in investigating Basilic Fly Studio's past further, check out this free graph covering Basilic Fly Studio's past earnings, revenue and cash flow.

So How Is Basilic Fly Studio's ROCE Trending?

Basilic Fly Studio deserves to be commended in regards to it's returns. The company has employed 6,960% more capital in the last four years, and the returns on that capital have remained stable at 23%. With returns that high, it's great that the business can continually reinvest its money at such appealing rates of return. If these trends can continue, it wouldn't surprise us if the company became a multi-bagger.

On a side note, Basilic Fly Studio has done well to reduce current liabilities to 18% of total assets over the last four years. This can eliminate some of the risks inherent in the operations because the business has less outstanding obligations to their suppliers and or short-term creditors than they did previously.

The Bottom Line On Basilic Fly Studio's ROCE

In summary, we're delighted to see that Basilic Fly Studio has been compounding returns by reinvesting at consistently high rates of return, as these are common traits of a multi-bagger. Yet over the last year the stock has declined 22%, so the decline might provide an opening. That's why we think it'd be worthwhile to look further into this stock given the fundamentals are appealing.

On a final note, we found 2 warning signs for Basilic Fly Studio (1 makes us a bit uncomfortable) you should be aware of.

If you'd like to see other companies earning high returns, check out our free list of companies earning high returns with solid balance sheets here.

Valuation is complex, but we're here to simplify it.

Discover if Basilic Fly Studio might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.