Tanla Platforms (NSE:TANLA) Is Investing Its Capital With Increasing Efficiency

What are the early trends we should look for to identify a stock that could multiply in value over the long term? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. Speaking of which, we noticed some great changes in Tanla Platforms' (NSE:TANLA) returns on capital, so let's have a look.

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Understanding Return On Capital Employed (ROCE)

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. Analysts use this formula to calculate it for Tanla Platforms:

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

0.28 = ₹6.0b ÷ (₹32b - ₹10b) (Based on the trailing twelve months to December 2024).

So, Tanla Platforms has an ROCE of 28%. That's a fantastic return and not only that, it outpaces the average of 12% earned by companies in a similar industry.

See our latest analysis for Tanla Platforms

Above you can see how the current ROCE for Tanla Platforms compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for Tanla Platforms .

So How Is Tanla Platforms' ROCE Trending?

Tanla Platforms is displaying some positive trends. The data shows that returns on capital have increased substantially over the last five years to 28%. Basically the business is earning more per dollar of capital invested and in addition to that, 168% more capital is being employed now too. So we're very much inspired by what we're seeing at Tanla Platforms thanks to its ability to profitably reinvest capital.

Our Take On Tanla Platforms' ROCE

All in all, it's terrific to see that Tanla Platforms is reaping the rewards from prior investments and is growing its capital base. And a remarkable 779% total return over the last five years tells us that investors are expecting more good things to come in the future. In light of that, we think it's worth looking further into this stock because if Tanla Platforms can keep these trends up, it could have a bright future ahead.

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

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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.