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Capital Investment Trends At Godrej Consumer Products (NSE:GODREJCP) Look Strong

Simply Wall St · 1d ago

There are a few key trends to look for if we want to identify the next multi-bagger. In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. That's why when we briefly looked at Godrej Consumer Products' (NSE:GODREJCP) ROCE trend, we were very happy with what we saw.

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Return On Capital Employed (ROCE): What Is It?

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. To calculate this metric for Godrej Consumer Products, this is the formula:

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

0.21 = ₹27b ÷ (₹199b - ₹69b) (Based on the trailing twelve months to September 2025).

So, Godrej Consumer Products has an ROCE of 21%. In absolute terms that's a very respectable return and compared to the Personal Products industry average of 18% it's pretty much on par.

See our latest analysis for Godrej Consumer Products

roce
NSEI:GODREJCP Return on Capital Employed December 16th 2025

In the above chart we have measured Godrej Consumer Products' prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Godrej Consumer Products for free.

The Trend Of ROCE

We'd be pretty happy with returns on capital like Godrej Consumer Products. Over the past five years, ROCE has remained relatively flat at around 21% and the business has deployed 34% more capital into its operations. Returns like this are the envy of most businesses and given it has repeatedly reinvested at these rates, that's even better. If these trends can continue, it wouldn't surprise us if the company became a multi-bagger.

Our Take On Godrej Consumer Products' ROCE

Godrej Consumer Products has demonstrated its proficiency by generating high returns on increasing amounts of capital employed, which we're thrilled about. Therefore it's no surprise that shareholders have earned a respectable 72% return if they held over the last five years. So even though the stock might be more "expensive" than it was before, we think the strong fundamentals warrant this stock for further research.

On a separate note, we've found 1 warning sign for Godrej Consumer Products you'll probably want to know about.

If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning high returns on equity.