Investors Shouldn't Overlook The Favourable Returns On Capital At Cords Cable Industries (NSE:CORDSCABLE)

Simply Wall St · 4d ago

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. Ergo, when we looked at the ROCE trends at Cords Cable Industries (NSE:CORDSCABLE), we liked what we saw.

Our free stock report includes 2 warning signs investors should be aware of before investing in Cords Cable Industries. Read for free now.

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 Cords Cable Industries:

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

0.20 = ₹385m ÷ (₹3.7b - ₹1.8b) (Based on the trailing twelve months to December 2024).

Therefore, Cords Cable Industries has an ROCE of 20%. On its own, that's a very good return and it's on par with the returns earned by companies in a similar industry.

Check out our latest analysis for Cords Cable Industries

roce
NSEI:CORDSCABLE Return on Capital Employed April 16th 2025

Historical performance is a great place to start when researching a stock so above you can see the gauge for Cords Cable Industries' ROCE against it's prior returns. If you'd like to look at how Cords Cable Industries has performed in the past in other metrics, you can view this free graph of Cords Cable Industries' past earnings, revenue and cash flow.

So How Is Cords Cable Industries' ROCE Trending?

It's hard not to be impressed by Cords Cable Industries' returns on capital. The company has consistently earned 20% for the last five years, and the capital employed within the business has risen 21% in that time. Returns like this are the envy of most businesses and given it has repeatedly reinvested at these rates, that's even better. If Cords Cable Industries can keep this up, we'd be very optimistic about its future.

On a separate but related note, it's important to know that Cords Cable Industries has a current liabilities to total assets ratio of 47%, which we'd consider pretty high. This effectively means that suppliers (or short-term creditors) are funding a large portion of the business, so just be aware that this can introduce some elements of risk. While it's not necessarily a bad thing, it can be beneficial if this ratio is lower.

The Bottom Line On Cords Cable Industries' ROCE

In short, we'd argue Cords Cable Industries has the makings of a multi-bagger since its been able to compound its capital at very profitable rates of return. And the stock has done incredibly well with a 426% return over the last five years, so long term investors are no doubt ecstatic with that result. So while investors seem to be recognizing these promising trends, we still believe the stock deserves further research.

Like most companies, Cords Cable Industries does come with some risks, and we've found 2 warning signs that you should be aware of.

Cords Cable Industries is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.