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Indian Companies with High Return on Capital

Updated 16-Apr-2024

The companies ranked below are calculated using the Return on Capital formula given by Joel Greenblatt in his bestseller book Little Book That Still Beats The Market

Return on Capital = EBIT / (Net Working Capital + Net Fixed Assets)
EBIT = Earnings before Interest & Tax

Joel Greenblatt calculates Return on Capital as the ratio of pretax operating earnings (EBIT) to tangible capital employed (Net Working Capital + Net Fixed Assets). This ratio was used rather than the more commonly used ratios of return on equity (ROE, earnings/equity) or return on assets (ROA, earnings/assets) for several reasons. It allows us to compare earnings of different companies without the distortions arising from differences in tax rates and debt levels.

Net Working Capital + Net Fixed Assets (or tangible capital employed) was used in place of total assets. The idea here was to figure out how much capital is actually needed to conduct the company's business.

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6 Bajaj Auto Ltd.
7 Marico Ltd.
9 Britannia Industries Ltd.
10 Tata Consultancy Services Ltd.

The above companies are sorted based on the first part of Joel Greenblatt's Value Investing formula, to see Indian stocks ranked according to both parts of the formula click on the link below.

Greenblatt's Magic formula for Indian stocks (Premium Users Only)

Note - Companies currently in our database : 456. Financial companies and companies with negative earnings are not included in this list.