Returns At Credo Brands Marketing (NSE:MUFTI) Are On The Way Up
There are a few key trends to look for if we want to identify the next multi-bagger. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. Speaking of which, we noticed some great changes in Credo Brands Marketing's (NSE:MUFTI) returns on capital, so let's have a look.
What Is Return On Capital Employed (ROCE)?
If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Credo Brands Marketing, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.15 = ₹997m ÷ (₹7.8b - ₹1.2b) (Based on the trailing twelve months to September 2025).
Therefore, Credo Brands Marketing has an ROCE of 15%. By itself that's a normal return on capital and it's in line with the industry's average returns of 15%.
See our latest analysis for Credo Brands Marketing
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'd like to look at how Credo Brands Marketing has performed in the past in other metrics, you can view this free graph of Credo Brands Marketing's past earnings, revenue and cash flow.
The Trend Of ROCE
We like the trends that we're seeing from Credo Brands Marketing. The data shows that returns on capital have increased substantially over the last four years to 15%. Basically the business is earning more per dollar of capital invested and in addition to that, 79% more capital is being employed now too. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.
The Bottom Line On Credo Brands Marketing's ROCE
A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Credo Brands Marketing has. And since the stock has fallen 38% over the last year, there might be an opportunity here. With that in mind, we believe the promising trends warrant this stock for further investigation.
Like most companies, Credo Brands Marketing does come with some risks, and we've found 1 warning sign that you should be aware of.
While Credo Brands Marketing may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.
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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.