For those in pursuit of a multi-bagger investment, there are critical indicators to observe. Ideally, a company’s trajectory will exhibit two significant trends: an escalating return on capital employed (ROCE) and an expanding amount of capital utilized.
The presence of these trends typically signifies a robust business model coupled with ample prospects for profitable reinvestment. Upon examining the ROCE trend for Newgen Software Technologies (NSE: NEWGEN), our findings were notably encouraging.
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Comprehending Return On Capital Employed (ROCE)
For those unfamiliar with ROCE, it quantifies the ‘return’ (pre-tax profit) a company derives from its capital investments. Analysts apply the following formula to evaluate Newgen Software Technologies:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)
0.21 = ₹3.4b ÷ (₹20b – ₹4.3b) (Based on the trailing twelve months to June 2025).
Consequently, Newgen Software Technologies boasts an ROCE of 21%. This remarkable figure not only highlights its efficiency but also surpasses the average 12% return typical within its industry.
Explore our latest analysis on Newgen Software Technologies.NSEI: NEWGEN Return on Capital Employed August 26th, 2025
The graph illustrates how the current ROCE of Newgen Software Technologies contrasts with its historical performance. Nonetheless, examining past data provides only a partial picture. For a comprehensive view, consider accessing our free analyst report on Newgen Software Technologies.
Assessing the Trend of Newgen Software Technologies’ ROCE
The trends observed at Newgen Software Technologies are notably promising. Data reveals a significant increase in returns on capital over the past five years, now reaching 21%. Essentially, the business is yielding more on each invested dollar, with a concomitant 171% rise in capital employed. This ability to efficiently reinvest capital is deeply inspiring.
Additionally, it’s pertinent to note that Newgen Software Technologies has reduced its current liabilities to a mere 21% of total assets during this timeframe, decreasing reliance on suppliers or short-term creditors. This enhancement amplifies our confidence that the uptick in ROCE emerges from genuine improvements in business fundamentals, rather than mere financial engineering.
Our Perspective on Newgen Software Technologies’ ROCE
In summary, Newgen Software Technologies has convincingly demonstrated its capacity to reinvest within the enterprise while amplifying returns on employed capital, which is commendable. The stock has delivered a staggering 851% return to shareholders over five years, indicating that investors are attuned to these burgeoning changes.
Given these auspicious trends, a deeper investigation into the company’s prospects appears warranted.
Lastly, we have identified one potential warning sign for Newgen Software Technologies that merits attention.
Moreover, Newgen Software Technologies is not an isolated case of high-return investments. For those interested, we offer a free compilation of companies showcasing robust returns on equity coupled with sound fundamentals.
Valuation may be intricate, but our mission is to clarify.
Discover whether Newgen Software Technologies is potentially undervalued or overvalued through our thorough analysis, which includes fair value estimates, potential risks, dividends, insider transactions, and its financial state.
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This article by RS Web Solutions and Simply Wall St serves a general purpose. We provide insights based on historical data and analyst projections using an objective methodology. Our articles do not constitute financial advice, nor do they provide recommendations to buy or sell stock, considering your specific objectives or financial circumstances. Our analyses strive to deliver long-term, focused assessments grounded in fundamental data. Note that our evaluations may not account for the latest price-sensitive updates or qualitative aspects. RS Web Solutions and Simply Wall St do not hold positions in any mentioned stocks.
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