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Do Its Financials Have Any Role To Play In Driving A B Infrabuild Limited's (NSE:ABINFRA) Stock Up Recently?

Simply Wall St · 4d ago

A B Infrabuild's (NSE:ABINFRA) stock is up by a considerable 10% over the past week. As most would know, fundamentals are what usually guide market price movements over the long-term, so we decided to look at the company's key financial indicators today to determine if they have any role to play in the recent price movement. Particularly, we will be paying attention to A B Infrabuild's ROE today.

Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.

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How To Calculate Return On Equity?

Return on equity can be calculated by using the formula:

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

So, based on the above formula, the ROE for A B Infrabuild is:

12% = ₹193m ÷ ₹1.6b (Based on the trailing twelve months to September 2025).

The 'return' is the yearly profit. Another way to think of that is that for every ₹1 worth of equity, the company was able to earn ₹0.12 in profit.

See our latest analysis for A B Infrabuild

What Is The Relationship Between ROE And Earnings Growth?

Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features.

A B Infrabuild's Earnings Growth And 12% ROE

On the face of it, A B Infrabuild's ROE is not much to talk about. However, given that the company's ROE is similar to the average industry ROE of 13%, we may spare it some thought. Moreover, we are quite pleased to see that A B Infrabuild's net income grew significantly at a rate of 55% over the last five years. Given the slightly low ROE, it is likely that there could be some other aspects that are driving this growth. For example, it is possible that the company's management has made some good strategic decisions, or that the company has a low payout ratio.

We then compared A B Infrabuild's net income growth with the industry and we're pleased to see that the company's growth figure is higher when compared with the industry which has a growth rate of 35% in the same 5-year period.

past-earnings-growth
NSEI:ABINFRA Past Earnings Growth January 8th 2026

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. This then helps them determine if the stock is placed for a bright or bleak future. If you're wondering about A B Infrabuild's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Is A B Infrabuild Using Its Retained Earnings Effectively?

A B Infrabuild's ' three-year median payout ratio is on the lower side at 1.5% implying that it is retaining a higher percentage (99%) of its profits. So it looks like A B Infrabuild is reinvesting profits heavily to grow its business, which shows in its earnings growth.

Conclusion

In total, it does look like A B Infrabuild has some positive aspects to its business. Despite its low rate of return, the fact that the company reinvests a very high portion of its profits into its business, no doubt contributed to its high earnings growth. While we won't completely dismiss the company, what we would do, is try to ascertain how risky the business is to make a more informed decision around the company. To know the 2 risks we have identified for A B Infrabuild visit our risks dashboard for free.