Avanti Feeds (NSE:AVANTIFEED) Looks To Prolong Its Impressive Returns
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. With that in mind, the ROCE of Avanti Feeds (NSE:AVANTIFEED) looks attractive right now, so lets see what the trend of returns can tell us.
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. Analysts use this formula to calculate it for Avanti Feeds:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.20 = ₹6.8b ÷ (₹42b - ₹7.7b) (Based on the trailing twelve months to September 2025).
Thus, Avanti Feeds has an ROCE of 20%. In absolute terms that's a great return and it's even better than the Food industry average of 14%.
View our latest analysis for Avanti Feeds
Above you can see how the current ROCE for Avanti Feeds 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 Avanti Feeds .
What Does the ROCE Trend For Avanti Feeds Tell Us?
Avanti Feeds deserves to be commended in regards to it's returns. The company has consistently earned 20% for the last five years, and the capital employed within the business has risen 87% in that time. Returns like this are the envy of most businesses and given it has repeatedly reinvested at these rates, that's even better. If Avanti Feeds can keep this up, we'd be very optimistic about its future.
Our Take On Avanti Feeds' ROCE
In summary, we're delighted to see that Avanti Feeds has been compounding returns by reinvesting at consistently high rates of return, as these are common traits of a multi-bagger. And the stock has followed suit returning a meaningful 78% to shareholders over the last five years. So while the positive underlying trends may be accounted for by investors, we still think this stock is worth looking into further.
Like most companies, Avanti Feeds does come with some risks, and we've found 1 warning sign that you should be aware of.
Avanti Feeds is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.
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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.