Shareholders Are Optimistic That L&T Technology Services (NSE:LTTS) Will Multiply In Value

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. So, when we ran our eye over L&T Technology Services' (NSE:LTTS) trend of ROCE, we really liked what we saw.

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Return On Capital Employed (ROCE): What Is It?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for L&T Technology Services:

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

0.23 = ₹16b ÷ (₹97b - ₹29b) (Based on the trailing twelve months to September 2025).

So, L&T Technology Services has an ROCE of 23%. In absolute terms that's a great return and it's even better than the Professional Services industry average of 12%.

Check out our latest analysis for L&T Technology Services

Above you can see how the current ROCE for L&T Technology Services 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 L&T Technology Services for free.

What Does the ROCE Trend For L&T Technology Services Tell Us?

We'd be pretty happy with returns on capital like L&T Technology Services. The company has consistently earned 23% for the last five years, and the capital employed within the business has risen 91% in that time. With returns that high, it's great that the business can continually reinvest its money at such appealing rates of return. If L&T Technology Services can keep this up, we'd be very optimistic about its future.

In Conclusion...

L&T Technology Services has demonstrated its proficiency by generating high returns on increasing amounts of capital employed, which we're thrilled about. And long term investors would be thrilled with the 108% return they've received over the last five years. So while investors seem to be recognizing these promising trends, we still believe the stock deserves further research.

On a separate note, we've found 1 warning sign for L&T Technology Services you'll probably want to know about.

L&T Technology Services is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

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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.