Ester Industries (NSE:ESTER) ROC % : -2.88% (As of Mar. 2024)

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What is Ester Industries ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Ester Industries's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was -2.88%.

As of today (2024-06-04), Ester Industries's WACC % is 10.50%. Ester Industries's ROC % is -5.64% (calculated using TTM income statement data). Ester Industries earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Ester Industries ROC % Historical Data

The historical data trend for Ester Industries's ROC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Ester Industries ROC % Chart

Ester Industries Annual Data

Trend

Mar15

Mar16

Mar17

Mar18

Mar19

Mar20

Mar21

Mar22

Mar23

Mar24

ROC %

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18.64

21.85

9.59

1.70

-5.60

Ester Industries Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
ROC %	Get a 7-Day Free Trial															-1.11	-4.13	-6.53	-9.12	-2.88

Ester Industries ROC % Calculation

Ester Industries's annualized Return on Capital (ROC %) for the fiscal year that ended in Mar. 2024 is calculated as:

	ROC % (A: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Mar. 2023 )	+	Invested Capital (A: Mar. 2024 ))	/ count )
=	-916.543 * ( 1 - 10.34% )	/	( (14701.654	+	14624.111)	/ 2 )
=	-821.7724538	/	14662.8825
=	-5.60 %

where

	Invested Capital		(A: Mar. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	17145.362	-	377.936	-	( 2065.772	-	max(0, 3587.638	-	6065.856	+	2065.772	))
=	14701.654

	Invested Capital		(A: Mar. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	16430.612	-	665.98	-	( 1867.465	-	max(0, 4292.984	-	5433.505	+	1867.465	))
=	14624.111

Ester Industries's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	-470.488 * ( 1 - 10.56% )	/	( (0	+	14624.111)	/ 1 )
=	-420.8044672	/	14624.111
=	-2.88 %

where

	Invested Capital		(Q: Dec. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	0	-	0	-	( 0	-	max(0, 0	-	0	+	0	))
=	0

	Invested Capital		(Q: Mar. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	16430.612	-	665.98	-	( 1867.465	-	max(0, 4292.984	-	5433.505	+	1867.465	))
=	14624.111

Note: The Operating Income data used here is four times the quarterly (Mar. 2024) data.

Ester Industries (NSE:ESTER) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Ester Industries's WACC % is 10.50%. Ester Industries's ROC % is -5.64% (calculated using TTM income statement data). Ester Industries earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

Ester Industries ROC % Related Terms

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Ester Industries (NSE:ESTER) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Chemicals » Ester Industries Ltd (NSE:ESTER) » Definitions » ROC %

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Traded in Other Exchanges

500136:India

Address

Plot No. 11, Block-A, Infocity-I, Sector 34, Gurgaon, HR, IND, 122001

Website

https://www.esterindustries.com

Ester Industries Ltd is engaged in the manufacturing of polyester films, specialty polymers, and engineering plastic compounds. It operates through three segments; Polyester chips and film; Speciality Polymers and Engineering Plastics. The company generates maximum revenue from the Polyester chips and film segment. The Polyester chips and film segment is used in primarily flexible packaging and other industrial applications. It serves food packaging; beverage packaging; home and personal care; industrial packaging; construction; automotive; electrical and electronics, carpet, and other industries. Geographically, it derives a majority of its revenue from India.

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