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M.V.K. Agro Food Product Limited's (NSE:MVKAGRO) Stock Has Seen Strong Momentum: Does That Call For Deeper Study Of Its Financial Prospects?

Simply Wall St · 3d ago

M.V.K. Agro Food Product's (NSE:MVKAGRO) stock is up by a considerable 24% over the past three months. Given that stock prices are usually aligned with a company's financial performance in the long-term, we decided to study its financial indicators more closely to see if they had a hand to play in the recent price move. In this article, we decided to focus on M.V.K. Agro Food Product's 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. Simply put, it is used to assess the profitability of a company in relation to its equity capital.

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How Do You 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 M.V.K. Agro Food Product is:

7.4% = ₹101m ÷ ₹1.4b (Based on the trailing twelve months to September 2025).

The 'return' refers to a company's earnings over the last year. One way to conceptualize this is that for each ₹1 of shareholders' capital it has, the company made ₹0.07 in profit.

See our latest analysis for M.V.K. Agro Food Product

Why Is ROE Important For Earnings Growth?

We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. 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 everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics.

M.V.K. Agro Food Product's Earnings Growth And 7.4% ROE

As you can see, M.V.K. Agro Food Product's ROE looks pretty weak. Even compared to the average industry ROE of 11%, the company's ROE is quite dismal. In spite of this, M.V.K. Agro Food Product was able to grow its net income considerably, at a rate of 29% in the last five years. We believe that there might be other aspects that are positively influencing the company's earnings growth. Such as - high earnings retention or an efficient management in place.

Next, on comparing with the industry net income growth, we found that M.V.K. Agro Food Product's growth is quite high when compared to the industry average growth of 20% in the same period, which is great to see.

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

Earnings growth is a huge factor in stock valuation. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). This then helps them determine if the stock is placed for a bright or bleak future. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if M.V.K. Agro Food Product is trading on a high P/E or a low P/E, relative to its industry.

Is M.V.K. Agro Food Product Making Efficient Use Of Its Profits?

Given that M.V.K. Agro Food Product doesn't pay any regular dividends to its shareholders, we infer that the company has been reinvesting all of its profits to grow its business.

Summary

On the whole, we do feel that M.V.K. Agro Food Product has some positive attributes. Even in spite of the low rate of return, the company has posted impressive earnings growth as a result of reinvesting heavily into its business. 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. You can see the 2 risks we have identified for M.V.K. Agro Food Product by visiting our risks dashboard for free on our platform here.