Nasdaq
華爾街日報Chambal Fertilisers and Chemicals (NSE:CHAMBLFERT) Is Reinvesting To Multiply In Value
If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. 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. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. That's why when we briefly looked at Chambal Fertilisers and Chemicals' (NSE:CHAMBLFERT) ROCE trend, we were very happy with what we saw.
Return On Capital Employed (ROCE): What Is It?
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. To calculate this metric for Chambal Fertilisers and Chemicals, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.20 = ₹22b ÷ (₹139b - ₹25b) (Based on the trailing twelve months to September 2025).
Therefore, Chambal Fertilisers and Chemicals has an ROCE of 20%. In absolute terms that's a great return and it's even better than the Chemicals industry average of 12%.
See our latest analysis for Chambal Fertilisers and Chemicals
In the above chart we have measured Chambal Fertilisers and Chemicals' prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Chambal Fertilisers and Chemicals for free.
What Does the ROCE Trend For Chambal Fertilisers and Chemicals Tell Us?
In terms of Chambal Fertilisers and Chemicals' history of ROCE, it's quite impressive. The company has consistently earned 20% for the last five years, and the capital employed within the business has risen 34% in that time. Now considering ROCE is an attractive 20%, this combination is actually pretty appealing because it means the business can consistently put money to work and generate these high returns. If these trends can continue, it wouldn't surprise us if the company became a multi-bagger.
On a side note, Chambal Fertilisers and Chemicals has done well to reduce current liabilities to 18% of total assets over the last five years. Effectively suppliers now fund less of the business, which can lower some elements of risk.
The Bottom Line
In the end, the company has proven it can reinvest it's capital at high rates of returns, which you'll remember is a trait of a multi-bagger. And long term investors would be thrilled with the 120% 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.
If you'd like to know more about Chambal Fertilisers and Chemicals, we've spotted 3 warning signs, and 2 of them don't sit too well with us.
If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning high returns on equity.
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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.