Why We Like The Returns At Sonu Infratech (NSE:SONUINFRA)

What are the early trends we should look for to identify a stock that could multiply in value over the long term? 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. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. And in light of that, the trends we're seeing at Sonu Infratech's (NSE:SONUINFRA) look very promising so lets take a look.

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Understanding Return On Capital Employed (ROCE)

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. To calculate this metric for Sonu Infratech, this is the formula:

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

0.23 = ₹244m ÷ (₹1.8b - ₹772m) (Based on the trailing twelve months to September 2025).

So, Sonu Infratech has an ROCE of 23%. In absolute terms that's a great return and it's even better than the Construction industry average of 15%.

View our latest analysis for Sonu Infratech

Historical performance is a great place to start when researching a stock so above you can see the gauge for Sonu Infratech's ROCE against it's prior returns. If you're interested in investigating Sonu Infratech's past further, check out this free graph covering Sonu Infratech's past earnings, revenue and cash flow.

So How Is Sonu Infratech's ROCE Trending?

Investors would be pleased with what's happening at Sonu Infratech. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 23%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 447%. So we're very much inspired by what we're seeing at Sonu Infratech thanks to its ability to profitably reinvest capital.

On a side note, Sonu Infratech's current liabilities are still rather high at 42% of total assets. This can bring about some risks because the company is basically operating with a rather large reliance on its suppliers or other sorts of short-term creditors. While it's not necessarily a bad thing, it can be beneficial if this ratio is lower.

The Bottom Line On Sonu Infratech's ROCE

A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Sonu Infratech has. Since the stock has returned a staggering 100% to shareholders over the last three years, it looks like investors are recognizing these changes. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

One more thing to note, we've identified 4 warning signs with Sonu Infratech and understanding them should be part of your investment process.

High returns are a key ingredient to strong performance, so check out our free list ofstocks earning high returns on equity with solid balance sheets.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.