ROCE (Return on Capital Employed)

Profit earned on ALL the money in the business — borrowed as well as owned.

Operating profit divided by total capital employed (equity plus debt). Where ROE looks only at shareholders' money, ROCE asks how well the business uses every rupee it has, whoever it came from.

That makes it harder to flatter with borrowing, which is exactly why it is the better measure of underlying business quality. A company whose ROE looks great only because it is heavily leveraged will show a much plainer ROCE.

Compare ROCE against the cost of borrowing. A business earning 15% on capital that borrows at 9% is creating value; one earning 8% and borrowing at 9% is destroying it, however large its profits look.

Operating profit ₹6,000 crore on capital employed of ₹40,000 crore → ROCE = 15%.

Banks and lenders do not report ROCE, and asking for it is a category error rather than missing data. Their assets are funded by deposits, so "capital employed" has no ordinary meaning — use ROE for lenders. For every other company ROCE is the more honest of the two, because unlike ROE it cannot be lifted by paying a dividend.

Analysis only: Supath AI does not give investment advice. Consult a SEBI-registered financial advisor before making investment decisions.