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Narayana Hrudayalaya (NSE:NH) Is Looking To Continue Growing Its Returns On Capital

Simply Wall St · 6d ago

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base 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. So when we looked at Narayana Hrudayalaya (NSE:NH) and its trend of ROCE, we really liked what we saw.

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

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 Narayana Hrudayalaya, this is the formula:

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

0.17 = ₹11b ÷ (₹77b - ₹13b) (Based on the trailing twelve months to September 2025).

Therefore, Narayana Hrudayalaya has an ROCE of 17%. In absolute terms, that's a satisfactory return, but compared to the Healthcare industry average of 12% it's much better.

See our latest analysis for Narayana Hrudayalaya

roce
NSEI:NH Return on Capital Employed January 5th 2026

Above you can see how the current ROCE for Narayana Hrudayalaya compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Narayana Hrudayalaya for free.

How Are Returns Trending?

The fact that Narayana Hrudayalaya is now generating some pre-tax profits from its prior investments is very encouraging. About five years ago the company was generating losses but things have turned around because it's now earning 17% on its capital. In addition to that, Narayana Hrudayalaya is employing 217% more capital than previously which is expected of a company that's trying to break into profitability. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, both common traits of a multi-bagger.

The Key Takeaway

Overall, Narayana Hrudayalaya gets a big tick from us thanks in most part to the fact that it is now profitable and is reinvesting in its business. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

On the other side of ROCE, we have to consider valuation. That's why we have a FREE intrinsic value estimation for NH on our platform that is definitely worth checking out.

While Narayana Hrudayalaya 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.