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Sheetal Cool Products (NSE:SCPL) Might Have The Makings Of A Multi-Bagger

Simply Wall St · 2d ago

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? 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. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. With that in mind, we've noticed some promising trends at Sheetal Cool Products (NSE:SCPL) so let's look a bit deeper.

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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. Analysts use this formula to calculate it for Sheetal Cool Products:

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

0.17 = ₹271m ÷ (₹2.7b - ₹1.1b) (Based on the trailing twelve months to September 2025).

Therefore, Sheetal Cool Products has an ROCE of 17%. In absolute terms, that's a satisfactory return, but compared to the Food industry average of 14% it's much better.

See our latest analysis for Sheetal Cool Products

roce
NSEI:SCPL Return on Capital Employed December 10th 2025

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're interested in investigating Sheetal Cool Products' past further, check out this free graph covering Sheetal Cool Products' past earnings, revenue and cash flow.

What The Trend Of ROCE Can Tell Us

Sheetal Cool Products is displaying some positive trends. Over the last five years, returns on capital employed have risen substantially to 17%. The amount of capital employed has increased too, by 34%. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

On a side note, we noticed that the improvement in ROCE appears to be partly fueled by an increase in current liabilities. Effectively this means that suppliers or short-term creditors are now funding 40% of the business, which is more than it was five years ago. Keep an eye out for future increases because when the ratio of current liabilities to total assets gets particularly high, this can introduce some new risks for the business.

The Bottom Line

To sum it up, Sheetal Cool Products has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. Astute investors may have an opportunity here because the stock has declined 63% in the last three years. With that in mind, we believe the promising trends warrant this stock for further investigation.

One more thing to note, we've identified 3 warning signs with Sheetal Cool Products and understanding them should be part of your investment process.

While Sheetal Cool Products 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.