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Returns On Capital Are Showing Encouraging Signs At JTEKT India (NSE:JTEKTINDIA)

Simply Wall St · 5d ago

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. 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. Speaking of which, we noticed some great changes in JTEKT India's (NSE:JTEKTINDIA) returns on capital, so let's have a look.

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

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. To calculate this metric for JTEKT India, this is the formula:

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

0.071 = ₹913m ÷ (₹18b - ₹4.8b) (Based on the trailing twelve months to September 2025).

So, JTEKT India has an ROCE of 7.1%. Ultimately, that's a low return and it under-performs the Auto Components industry average of 13%.

View our latest analysis for JTEKT India

roce
NSEI:JTEKTINDIA Return on Capital Employed January 6th 2026

Above you can see how the current ROCE for JTEKT India compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for JTEKT India .

The Trend Of ROCE

The fact that JTEKT India is now generating some pre-tax profits from its prior investments is very encouraging. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 7.1% on its capital. In addition to that, JTEKT India is employing 113% more capital than previously which is expected of a company that's trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance.

In Conclusion...

In summary, it's great to see that JTEKT India has managed to break into profitability and is continuing to reinvest in its business. And investors seem to expect more of this going forward, since the stock has rewarded shareholders with a 76% return over the last five years. Therefore, we think it would be worth your time to check if these trends are going to continue.

JTEKT India does come with some risks though, we found 2 warning signs in our investment analysis, and 1 of those can't be ignored...

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.