The Return Trends At UFO Moviez India (NSE:UFO) Look Promising

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at UFO Moviez India (NSE:UFO) and its trend of ROCE, we really liked what we saw.

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What Is Return On Capital Employed (ROCE)?

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. The formula for this calculation on UFO Moviez India is:

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

0.11 = ₹468m ÷ (₹6.0b - ₹1.7b) (Based on the trailing twelve months to September 2025).

So, UFO Moviez India has an ROCE of 11%. In absolute terms, that's a satisfactory return, but compared to the Entertainment industry average of 6.5% it's much better.

Check out our latest analysis for UFO Moviez India

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

What Does the ROCE Trend For UFO Moviez India Tell Us?

UFO Moviez India has broken into the black (profitability) and we're sure it's a sight for sore eyes. While the business was unprofitable in the past, it's now turned things around and is earning 11% on its capital. On top of that, what's interesting is that the amount of capital being employed has remained steady, so the business hasn't needed to put any additional money to work to generate these higher returns. That being said, while an increase in efficiency is no doubt appealing, it'd be helpful to know if the company does have any investment plans going forward. Because in the end, a business can only get so efficient.

The Bottom Line On UFO Moviez India's ROCE

To sum it up, UFO Moviez India is collecting higher returns from the same amount of capital, and that's impressive. Since the total return from the stock has been almost flat over the last five years, there might be an opportunity here if the valuation looks good. So researching this company further and determining whether or not these trends will continue seems justified.

UFO Moviez India does have some risks though, and we've spotted 1 warning sign for UFO Moviez India that you might be interested in.

While UFO Moviez India may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.