Some Investors May Be Worried About Mrs. Bectors Food Specialities' (NSE:BECTORFOOD) Returns On Capital
There are a few key trends to look for if we want to identify the next multi-bagger. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. In light of that, when we looked at Mrs. Bectors Food Specialities (NSE:BECTORFOOD) and its ROCE trend, we weren't exactly thrilled.
What Is Return On Capital Employed (ROCE)?
If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Mrs. Bectors Food Specialities, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.12 = ₹1.6b ÷ (₹17b - ₹3.1b) (Based on the trailing twelve months to September 2025).
Thus, Mrs. Bectors Food Specialities has an ROCE of 12%. In absolute terms, that's a pretty normal return, and it's somewhat close to the Food industry average of 14%.
View our latest analysis for Mrs. Bectors Food Specialities
Above you can see how the current ROCE for Mrs. Bectors Food Specialities compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for Mrs. Bectors Food Specialities .
The Trend Of ROCE
When we looked at the ROCE trend at Mrs. Bectors Food Specialities, we didn't gain much confidence. Around five years ago the returns on capital were 16%, but since then they've fallen to 12%. However, given capital employed and revenue have both increased it appears that the business is currently pursuing growth, at the consequence of short term returns. If these investments prove successful, this can bode very well for long term stock performance.
The Bottom Line On Mrs. Bectors Food Specialities' ROCE
In summary, despite lower returns in the short term, we're encouraged to see that Mrs. Bectors Food Specialities is reinvesting for growth and has higher sales as a result. And the stock has done incredibly well with a 215% return over the last three years, so long term investors are no doubt ecstatic with that result. So while the underlying trends could already be accounted for by investors, we still think this stock is worth looking into further.
One final note, you should learn about the 2 warning signs we've spotted with Mrs. Bectors Food Specialities (including 1 which is significant) .
While Mrs. Bectors Food Specialities isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.
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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.