WEBULL

Garware Hi-Tech Films Limited's (NSE:GRWRHITECH) Fundamentals Look Pretty Strong: Could The Market Be Wrong About The Stock?

Simply Wall St · 2d ago

With its stock down 15% over the past month, it is easy to disregard Garware Hi-Tech Films (NSE:GRWRHITECH). But if you pay close attention, you might gather that its strong financials could mean that the stock could potentially see an increase in value in the long-term, given how markets usually reward companies with good financial health. In this article, we decided to focus on Garware Hi-Tech Films' ROE.

Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Put another way, it reveals the company's success at turning shareholder investments into profits.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

How Is ROE Calculated?

The formula for ROE is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

So, based on the above formula, the ROE for Garware Hi-Tech Films is:

12% = ₹3.1b ÷ ₹25b (Based on the trailing twelve months to September 2025).

The 'return' refers to a company's earnings over the last year. So, this means that for every ₹1 of its shareholder's investments, the company generates a profit of ₹0.12.

View our latest analysis for Garware Hi-Tech Films

What Has ROE Got To Do With Earnings Growth?

Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company’s earnings growth potential. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.

Garware Hi-Tech Films' Earnings Growth And 12% ROE

When you first look at it, Garware Hi-Tech Films' ROE doesn't look that attractive. Although a closer study shows that the company's ROE is higher than the industry average of 9.8% which we definitely can't overlook. Even more so after seeing Garware Hi-Tech Films' exceptional 22% net income growth over the past five years. That being said, the company does have a slightly low ROE to begin with, just that it is higher than the industry average. So, there might well be other reasons for the earnings to grow. Such as- high earnings retention or the company belonging to a high growth industry.

As a next step, we compared Garware Hi-Tech Films' net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 8.6%.

past-earnings-growth
NSEI:GRWRHITECH Past Earnings Growth December 19th 2025

Earnings growth is a huge factor in stock valuation. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock's future looks promising or ominous. Is Garware Hi-Tech Films fairly valued compared to other companies? These 3 valuation measures might help you decide.

Is Garware Hi-Tech Films Efficiently Re-investing Its Profits?

Garware Hi-Tech Films has a really low three-year median payout ratio of 11%, meaning that it has the remaining 89% left over to reinvest into its business. So it looks like Garware Hi-Tech Films is reinvesting profits heavily to grow its business, which shows in its earnings growth.

Additionally, Garware Hi-Tech Films has paid dividends over a period of nine years which means that the company is pretty serious about sharing its profits with shareholders.

Conclusion

Overall, we are quite pleased with Garware Hi-Tech Films' performance. In particular, it's great to see that the company has seen significant growth in its earnings backed by a respectable ROE and a high reinvestment rate.