5 Large-Cap Stocks With High ROCE Of More Than 40% Over a Three-Year Average

Return on capital employed (ROCE) alerts traders about a company's capital efficiency. Even if two organizations have equal earnings and profit margins, their returns on capital utilized can be drastically different. While they may appear to be comparable on the surface, their attitudes about capital spending are vastly different. Investors can use the ROCE ratio to assess different companies in the market before making an investment decision. As an investor, you can use ROCE to figure out which company spends its money most efficiently in order to generate healthy returns. The following are large-cap stocks that have had a strong ROCE over the last three years.

Hindustan Unilever

Hindustan Unilever Limited, headquartered in Mumbai, India, is a consumer goods corporation. It is a subsidiary of the British business Unilever. Foods, beverages, cleaning agents, personal care items, water purifiers, and other fast-moving consumer goods are among its offerings.

Hindustan Unilever Ltd. has declared an equity dividend of Rs 31.00 per share in the last 12 months. This equates to a dividend yield of 1.14 percent at the current share price of Rs 2709.50.

Over the last three years, the company has maintained a healthy ROCE of 65.2 percent.

Nestle India

Nestle India, founded in 1959, is a large-cap company in the FMCG industry with a market capitalization of Rs 189,381.68 crore. The stock returned 105.06 percent over three years, compared to 61.71 percent for the Nifty 100 index. Over a three-year period, the stock returned 105.06 percent, while the Nifty FMCG provided investors a 38.54 percent return. Nestle India Ltd. has declared an equity dividend of Rs 225.00 per share in the last 12 months. At the current share price of Rs 19663.65, this translates to a 1.14 percent dividend yield. In the most recent quarter, the company generated a net profit after tax of Rs 538.58 crore.

Over the last three years, the company has maintained a healthy ROCE of 50.7 percent.

Tata Consultancy Services

Tata Consultancy Services is an Indian multinational information technology services and consulting firm based in Mumbai, Maharashtra, with its main campus in Chennai, Tamil Nadu. The stock returned 75.3 percent over three years, compared to 61.71 percent for the Nifty 100 index. Over a three-year period, the stock returned 75.3 percent, while the Nifty IT returned 131.63 percent to investors.

In the most recent quarter, the company generated a net profit after tax of Rs 9,031.00 crore. Since October 28, 2004, Tata Consultancy Services Ltd. has declared 71 dividends. This equates to a dividend yield of 1.04 percent at the current share price of Rs 3850.00.

Over the last three years, the company has maintained a healthy ROCE of 46.1 percent.

Britannia Industries

Britannia Industries Limited is Indian food and beverage firm that is part of the Nusli Wadia-led Wadia Group. It is one of India's oldest firms, having been founded in 1892 and having its headquarters in Kolkata. It is best known for its biscuit goods. The company's yearly revenue growth rate of 13.22% surpassed its three-year CAGR of 9.98%. The stock returned 40.69 percent over three years, compared to 61.71 percent for the Nifty 100. In the most recent quarter, the company generated a net profit of Rs 386.80 crore. Over a three-year period, the stock yielded 40.69 percent, while the Nifty FMCG yielded 38.54 percent.

Marico

Only 1.3 percent of trading sessions in the last 16 years had intraday drops of more than 5%. The stock returned 62.61 percent over three years, compared to 61.71 percent for the Nifty 100 index. Over a three-year period, the stock returned 62.61 percent, while the Nifty FMCG provided investors a 38.54 percent return.

In the most recent quarter, the company generated a net profit after tax of Rs 365.00 crore. Since September 4, 2000, Marico Ltd. has declared 57 dividends. At the current share price of Rs 548.05, this translates to a 1.37 percent dividend yield.

What to consider when investing?

The biggest disadvantage of ROCE is that it calculates returns based on the book value of the company's assets. Even though cash flow has been constant, ROCE will increase as items are depreciated. As a result, older companies with depreciated assets will have a greater ROCE than newer, presumably better companies.

Disclaimer

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only.