Nasdaq
華爾街日報Bombay Super Hybrid Seeds (NSE:BSHSL) Is Investing Its Capital With Increasing Efficiency
There are a few key trends to look for if we want to identify the next multi-bagger. 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. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. Speaking of which, we noticed some great changes in Bombay Super Hybrid Seeds' (NSE:BSHSL) returns on capital, so let's have a look.
What Is 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. The formula for this calculation on Bombay Super Hybrid Seeds is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.28 = ₹350m ÷ (₹1.6b - ₹396m) (Based on the trailing twelve months to September 2025).
So, Bombay Super Hybrid Seeds has an ROCE of 28%. In absolute terms that's a great return and it's even better than the Food industry average of 14%.
Check out our latest analysis for Bombay Super Hybrid Seeds
While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how Bombay Super Hybrid Seeds has performed in the past in other metrics, you can view this free graph of Bombay Super Hybrid Seeds' past earnings, revenue and cash flow.
What Does the ROCE Trend For Bombay Super Hybrid Seeds Tell Us?
The trends we've noticed at Bombay Super Hybrid Seeds are quite reassuring. The data shows that returns on capital have increased substantially over the last five years to 28%. Basically the business is earning more per dollar of capital invested and in addition to that, 336% more capital is being employed now too. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.
On a related note, the company's ratio of current liabilities to total assets has decreased to 24%, which basically reduces it's funding from the likes of short-term creditors or suppliers. So shareholders would be pleased that the growth in returns has mostly come from underlying business performance.
The Bottom Line On Bombay Super Hybrid Seeds' ROCE
In summary, it's great to see that Bombay Super Hybrid Seeds can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. In light of that, we think it's worth looking further into this stock because if Bombay Super Hybrid Seeds can keep these trends up, it could have a bright future ahead.
If you'd like to know about the risks facing Bombay Super Hybrid Seeds, we've discovered 1 warning sign that you should be aware of.
If you'd like to see other companies earning high returns, check out our free list of companies earning high returns with solid balance sheets 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.