Orissa Bengal Carrier (NSE:OBCL) Will Be Hoping To Turn Its Returns On Capital Around

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. 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. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Having said that, from a first glance at Orissa Bengal Carrier (NSE:OBCL) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

Understanding Return On Capital Employed (ROCE)

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. To calculate this metric for Orissa Bengal Carrier, this is the formula:

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

0.067 = ₹75m ÷ (₹1.6b - ₹510m) (Based on the trailing twelve months to March 2025).

Therefore, Orissa Bengal Carrier has an ROCE of 6.7%. Ultimately, that's a low return and it under-performs the Transportation industry average of 15%.

View our latest analysis for Orissa Bengal Carrier

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 want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Orissa Bengal Carrier.

So How Is Orissa Bengal Carrier's ROCE Trending?

When we looked at the ROCE trend at Orissa Bengal Carrier, we didn't gain much confidence. Around five years ago the returns on capital were 19%, but since then they've fallen to 6.7%. On the other hand, the company has been employing more capital without a corresponding improvement in sales in the last year, which could suggest these investments are longer term plays. It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line.

In Conclusion...

To conclude, we've found that Orissa Bengal Carrier is reinvesting in the business, but returns have been falling. And investors appear hesitant that the trends will pick up because the stock has fallen 47% in the last three years. Therefore based on the analysis done in this article, we don't think Orissa Bengal Carrier has the makings of a multi-bagger.

Orissa Bengal Carrier does come with some risks though, we found 5 warning signs in our investment analysis, and 3 of those are a bit concerning...

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.