ROCE (Return on Capital Employed): Meaning, Formula & Good ROCE
ROCE tells you how much profit a business earns on every ₹100 put into it.
The formula
Money in the business = the owners' money + the money borrowed
Example: Navin Fluorine in FY26 had a ROCE of 21.2%.
Where 24 companies stand
A common rule of thumb is that a ROCE of 15% or more is good. 11 of these 24 companies are at 15% or above.
ROCE for FY26. Capital is the average of this year and last year, the same way Screener calculates it.
What a new plant does to ROCE
When a company builds a new plant, the money is spent first. The profit from that plant comes later.
Company: Navin Fluorine. The line is ROCE. The bars show how much money was added to plants and unfinished work each year, in ₹ crore.
Still in the dip
Deepak Nitrite's ROCE has fallen from 44.6% while it spends money on new plants. The profit from those plants has not shown up yet.
In FY26, ₹1,828 cr was spent on plants that are not finished yet. This money is counted in capital, but it is not earning any profit yet.
Three ways ROCE fools you
Check a company
ROCE: common questions
What is the full form of ROCE?
ROCE stands for Return on Capital Employed.
What is the ROCE formula?
ROCE = EBIT ÷ capital employed × 100. EBIT is profit before interest and tax. Capital employed is the owners' money plus borrowings. This site, like Screener, uses the average capital of the current and previous year.
What is a good ROCE?
A common rule of thumb is 15% or more, and higher than the company's cost of borrowing. Compare companies within the same sector, and over several years rather than one.
ROCE vs ROE: what is the difference?
ROE counts only the owners' money. ROCE counts the owners' money and borrowings, so a company cannot make its ROCE look better by taking on debt.
What does ROCE mean in the stock market?
It shows how well a company turns the money invested in it into profit. Investors use it to compare businesses and to judge whether new investment is paying off.