Top 5 high growth stocks with ROE & ROCE greater than 40% - YouTube

Hi, When we do a fundamental analysis of any stock we use a lot of financial ratios

like PE Ratio, PB Ratio, Net Profit Margin, Debt to Equity Ratio, etc.

2 ratios are important – ROE i.e. Return on Equity, and ROCE i.e. Return on Capital Employed.

That's why in today's video we will tell you about 5 such companies whose ROE and ROCE ratio is more than 40%.

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So let's now come back to our topic.

We will talk about those 5 companies soon but before that let's understand the definition of ROCE and ROCE ratio.

Return on Equity indicates the profitability of the company.

To calculate this, we divide the company's net income by its shareholders' equity.

Now let's talk about ROCE i.e. return on capital employed.

ROCE tells us how well a company can utilize its capital.

To calculate this, we divide EBIT (Earnings Before Interest and Tax) by the total capital employed.

ROCE also takes into account the debt of the company and hence is a good metric to judge companies that operate in capital-intensive sectors.

Generally the higher the ROE and ROCE, the better it is considered for a company

Because we get to know how efficiently the company can use its equity or overall capital.

So here we have understood the concept of ROE and ROCE.

Also, while selecting the stocks, we have also taken care that these companies should also be fundamentally strong.

So in this list, we will tell you about the stocks whose:

Market cap more than 5000 crores,

Debt to Equity less than 1, and

Net Profit Margin is greater than 15%

ROC and ROCE are both over 40%.

We have shortlisted 5 companies with the highest market cap among the criteria and companies that meet them.

The numbers in the video are taken along with the data after market closing on 3rd February 2021.

We have put the list in ascending order of the market cap.

So let's start today's list.

The first company is Tanla Platforms Limited.

This company is involved in the business of Cloud Communications.

The ROE of the company is 44.65% and the ROCE is 51.96%.

The company has a PE ratio of 47.63, and a Debt to Equity ratio of 0.04.

In terms of profitability, the company has a Net Profit Margin of 15.15%.

In the last 5 years, the company's sales have compounded at the rate of 40.25%.

The share price of the company has increased by 150.95% in the last one year.

In the last 5 years, the company has given an annual return of 97.70%.

Number two is Clean Science and Technology Limited.

This company is one of the leading chemical manufacturing companies in India.

The ROE of the company is 45.01% and the ROCE is 60.52%.

The company has a PE Ratio of 122.60, and a Debt to Equity Ratio of 0 i.e. it is a debt-free company.

Talking about profitability, the company has a Net Profit Margin of 38.76%.

In the last 5 years, the company's sales have compounded at the rate of 29.69%.

This company was listed on the stock market on July 19, 2021.

And till now the company has given a return of 154.55% of its issue price.

The third company is Colgate-Palmolive (India) Limited.

This company is involved in the manufacturing of toothpaste, tooth powder, toothbrush, and other personal care products.

The ROE of the company is 75.07% and the ROCE is 92.00%.

The company has a PE Ratio of 37.41, and a Debt to Equity Ratio of 0.06.

Talking about profitability, the Net Profit Margin of the company is 21.40%.

In the last 5 years, the company's sales have compounded at the rate of 4.59%.

In the last one year, the company's share has gone down to 8.62%.

In the last 5 years, the company has given a compounded annual return of 10.25%.

Procter & Gamble Hygiene & Health Care Ltd. is at number four.

The company manufactures and sells FMCG products in the Femcare and Healthcare segments.

The ROE of the company is 69.78% and the ROCE is 93.78%.

The company has a PE Ratio of 83.58, and a Debt to Equity Ratio of 0 i.e. it is a debt-free company.

Talking about profitability, the company has a Net Profit Margin of 18.27%.

In the last 5 years, the company's sales have compounded at the rate of 9.45%.

In the last one year, the share price of the company has grown by 30.66%.

In the last 5 years, the company has given a compounded annual return of 16.22%.

The fifth company is Nestle India Limited.

This company is one of the leading FMCG companies in India in the food segment.

the ROE of the company is 105.76% and the ROCE is 139.29%.

The company has a PE ratio of 78.77, and a debt to equity ratio of 0.07.

Talking about profitability, the net profit margin of the company is 15.60%.

In the last 5 years, the company's sales have compounded at the rate of 10.31%.

The share price of the company has grown by 6.64% in the last one year.

In the last 5 years, the company has given an annual return of 24.63%.

So these are the 5 companies that ROE and ROCE have the most.

You can see the name of all these companies and their ROE and ROCE ratios on your screen.

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