To find a multi-bagger stock, what are the underlying trends we should look for in a business? 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. Speaking of which, we noticed some great changes in Jyoti Structures Limited (NSE:JYOTISTRUC) returns on capital, so let's have a look.

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 Jyoti Structures:

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

0.012 = ₹300m ÷ (₹29b - ₹4.0b) (Based on the trailing twelve months to December 2025).

Thus, Jyoti Structures has an ROCE of 1.2%. Ultimately, that's a low return and it under-performs the Construction industry average of 15%.

View our latest analysis for Jyoti Structures

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

What Can We Tell From Jyoti Structures' ROCE Trend?
The fact that Jyoti Structures is now generating some pre-tax profits from its prior investments is very encouraging. About three years ago the company was generating losses but things have turned around because it's now earning 1.2% on its capital. And unsurprisingly, like most companies trying to break into the black, Jyoti Structures is utilizing 23% more capital than it was three years ago. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, both common traits of a multi-bagger.

The Bottom Line On Jyoti Structures' ROCE
To the delight of most shareholders, Jyoti Structures has now broken into profitability. And a remarkable 148% total return over the last five years tells us that investors are expecting more good things to come in the future. Therefore, we think it would be worth your time to check if these trends are going to continue.

If you want to continue researching Jyoti Structures, you might be interested to know about the 3 warning signs that our analysis has discovered.

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.

Source: https://simplywall.st/stocks/in/capital-goods/nse-jyotistruc/jyoti-structures-shares/news/jyoti-structures-nsejyotistruc-is-experiencing-growth-in-ret