High ROCE stocks in India: ROCE of 20% or more

Only one test decides the list: return on capital employed of 20% or more, a cut-off this page sets for itself. The list can be narrowed by sector or size, and shows each company's return on equity, five-year averages of both returns, operating margin and net margin.

ROCE is operating profit divided by capital employed, as a percentage. Operating profit is revenue less operating expenses and depreciation, without other income and one-off items. Capital employed is the whole group's net worth, including other owners' stakes in its subsidiaries, plus borrowings. Net worth is the owners' capital: share capital plus accumulated reserves.

Lease liabilities are not counted, because results filings do not state them. A business with heavy leases can show a higher ROCE here than a calculation that includes them.

Return on equity (ROE) is the last twelve months' profit belonging to shareholders as a percentage of their net worth. It looks only at the owners' money, so borrowing more can raise it. ROCE counts borrowings in the base, so the split between owners and lenders does not change it. The page shows both side by side.

ROCE 5Y is the average of the last five years' ROCE. One year can be lifted by a one-time swing in profit, so the average shows whether a company has held the level.

ROCE compares well only between similar businesses. Banks and other lenders earn their income on borrowed money, so operating profit and capital employed do not fit their accounts; the page gives them no ROCE and they do not appear here. A capital base close to zero can produce ratios of several hundred percent that say little about durability. Operating profit is also before interest and tax, so it is not the profit that reaches shareholders.