Returns Are Gaining Momentum At Twamev Construction and Infrastructure (NSE:TICL)
If you're looking for a multi-bagger, there's a few things to keep an eye out for. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing 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. With that in mind, we've noticed some promising trends at Twamev Construction and Infrastructure (NSE:TICL) so let's look a bit deeper.
What Is Return On Capital Employed (ROCE)?
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 Twamev Construction and Infrastructure, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.074 = ₹257m ÷ (₹7.2b - ₹3.8b) (Based on the trailing twelve months to June 2025).
Therefore, Twamev Construction and Infrastructure has an ROCE of 7.4%. Ultimately, that's a low return and it under-performs the Construction industry average of 15%.
Check out our latest analysis for Twamev Construction and Infrastructure
Historical performance is a great place to start when researching a stock so above you can see the gauge for Twamev Construction and Infrastructure's ROCE against it's prior returns. If you're interested in investigating Twamev Construction and Infrastructure's past further, check out this free graph covering Twamev Construction and Infrastructure's past earnings, revenue and cash flow.
How Are Returns Trending?
We're delighted to see that Twamev Construction and Infrastructure is reaping rewards from its investments and is now generating some pre-tax profits. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 7.4% on its capital. In addition to that, Twamev Construction and Infrastructure is employing 40% more capital than previously which is expected of a company that's trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance.
In another part of our analysis, we noticed that the company's ratio of current liabilities to total assets decreased to 52%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. Therefore we can rest assured that the growth in ROCE is a result of the business' fundamental improvements, rather than a cooking class featuring this company's books. Nevertheless, there are some potential risks the company is bearing with current liabilities that high, so just keep that in mind.
What We Can Learn From Twamev Construction and Infrastructure's ROCE
To the delight of most shareholders, Twamev Construction and Infrastructure has now broken into profitability. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.
Twamev Construction and Infrastructure does come with some risks though, we found 5 warning signs in our investment analysis, and 2 of those are potentially serious...
For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and 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.