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The Returns At GAIL (India) (NSE:GAIL) Aren't Growing

Simply Wall St · 5d ago

To find a multi-bagger stock, what are the underlying trends we should look for in a business? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount 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. However, after investigating GAIL (India) (NSE:GAIL), we don't think it's current trends fit the mold of a multi-bagger.

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Understanding Return On Capital Employed (ROCE)

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. The formula for this calculation on GAIL (India) is:

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

0.086 = ₹96b ÷ (₹1.4t - ₹243b) (Based on the trailing twelve months to December 2025).

Therefore, GAIL (India) has an ROCE of 8.6%. Ultimately, that's a low return and it under-performs the Gas Utilities industry average of 13%.

See our latest analysis for GAIL (India)

roce
NSEI:GAIL Return on Capital Employed February 16th 2026

Above you can see how the current ROCE for GAIL (India) 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 GAIL (India) for free.

How Are Returns Trending?

The returns on capital haven't changed much for GAIL (India) in recent years. The company has employed 75% more capital in the last five years, and the returns on that capital have remained stable at 8.6%. This poor ROCE doesn't inspire confidence right now, and with the increase in capital employed, it's evident that the business isn't deploying the funds into high return investments.

The Bottom Line

As we've seen above, GAIL (India)'s returns on capital haven't increased but it is reinvesting in the business. Investors must think there's better things to come because the stock has knocked it out of the park, delivering a 110% gain to shareholders who have held over the last five years. However, unless these underlying trends turn more positive, we wouldn't get our hopes up too high.

One more thing to note, we've identified 2 warning signs with GAIL (India) and understanding these should be part of your investment process.

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.