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MTAR Technologies (NSE:MTARTECH) Could Be Struggling To Allocate Capital

Simply Wall St · 3d ago

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. However, after investigating MTAR Technologies (NSE:MTARTECH), we don't think it's current trends fit the mold of a multi-bagger.

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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 MTAR Technologies, this is the formula:

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

0.092 = ₹773m ÷ (₹12b - ₹3.3b) (Based on the trailing twelve months to September 2025).

Therefore, MTAR Technologies has an ROCE of 9.2%. Ultimately, that's a low return and it under-performs the Machinery industry average of 15%.

Check out our latest analysis for MTAR Technologies

roce
NSEI:MTARTECH Return on Capital Employed January 7th 2026

Above you can see how the current ROCE for MTAR Technologies 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 MTAR Technologies .

What Does the ROCE Trend For MTAR Technologies Tell Us?

When we looked at the ROCE trend at MTAR Technologies, we didn't gain much confidence. Around five years ago the returns on capital were 21%, but since then they've fallen to 9.2%. However, given capital employed and revenue have both increased it appears that the business is currently pursuing growth, at the consequence of short term returns. If these investments prove successful, this can bode very well for long term stock performance.

What We Can Learn From MTAR Technologies' ROCE

In summary, despite lower returns in the short term, we're encouraged to see that MTAR Technologies is reinvesting for growth and has higher sales as a result. And the stock has followed suit returning a meaningful 57% to shareholders over the last three years. So while the underlying trends could already be accounted for by investors, we still think this stock is worth looking into further.

MTAR Technologies does have some risks though, and we've spotted 1 warning sign for MTAR Technologies that you might be interested in.

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