Top 5 Long-Term Stocks with High ROE and ROCE

India's equity market offers thousands of investment options.

However, the real wealth creators are those rare companies that demonstrate good capital efficiency. These are the businesses which not only generate strong profits but do so by efficiently utilising both shareholders' money and borrowed capital.

This is where two critical financial metrics become important: Return on Equity (ROE) and Return on Capital Employed (ROCE).

ROE measures how effectively a company uses shareholders' money to generate profits. ROCE takes a broader view, evaluating how well a company generates returns from all its capital, including debt.

And when any company delivers high ROE and ROCE together, then it signals efficient value creation without excessive financial leverage, making it ideal for the long-term wealth creation.

In this article, we'll examine the top 5 long-term Indian stocks with High ROE and ROCE.

Nestle India

The first company in our list is Nestle India. It is a prominent Fast Moving Consumer Goods (FMCG) company which is operating as a subsidiary of the Swiss multinational Nestle S.A., which holds a significant 62% stake.

Its core business revolves around Milk Products and Nutrition, Prepared Dishes and Cooking Aids, Powdered and Liquid Beverages, and Confectionery.

Recent performance highlights indicate strong growth in its beverages and confectionery segments, with NESCAFE notably gaining market share and MAGGI experiencing a return to volume growth.

The revenue streams of Nestle are diversified across consumer foods, beverages, and confectionery, in which liquid beverage is the largest growth contributor in FY25, followed by confectionery.

The company's focus on enhancing its infrastructure, implementing localised communication strategies, and fostering strong consumer connections drive the revenue.

Nestle's Financial Performance

Nestle Financial Snapshot (FY21 to FY25)

Particular	FY21	FY22	FY23	FY24 (15 Months)	FY25	5-Year CAGR
Revenue (Rs m)	147,405.90	168,969.60	191,263.00	243,938.90	202,015.60	8.19%
Net Profit (Rs m)	21,184.10	23,905.20	29,986.70	39,328.40	33,145	11.67%
Operating Profit Margin	24%	22%	23%	24%	24%
EPS (Rs)	10.99	12.4	15.55	20.4	17.19
Dividend Payout	91%	89%	56%	79%	79%

Source: Company Annual Report

Note that FY24 was 15 months (January 2023 to March 2024) due to financial year changes, making direct comparison challenging.

Nestle shows financial consistency with net profit growing higher than the revenue, which reflects the company's pricing power and operational efficiency.

If we look at the company's ROE and ROCE figures, in FY24, ROE was 108.5% and ROCE was around 114.4% indicating highly efficient capital utilisation.

However, these numbers moderated in FY25, with ROE dropping to 88.9% and ROCE to 79.3%. The reason was strategic short-term borrowing undertaken to meet working capital requirements.

This borrowing increased the capital employed base, without proportional earnings growth led to a reduction in efficiency ratios.

#2 Colgate Palmolive (India)

The second name in our list is Colgate-Palmolive (India). It stands as a leading entity in India's oral care and personal care sectors.

The company is involved in the manufacturing and trading of a diverse array of products for oral hygiene and personal grooming.

Its extensive product portfolio includes toothpaste, tooth powder, and toothbrushes, marketed and sold under its highly recognised and trusted brands, Colgate and Palmolive. The oral care segment, particularly toothpaste, serves as the dominant driver of its revenue.

Colgate Palmolive (India) Financial Performance

Colgate Palmolive (India) Financial Snapshot (FY21 to FY25)

Particular	FY21	FY22	FY23	FY24	FY25	5-Year CAGR
Revenue (Rs m)	48,100	50,660	51,880	56,440	59,990	5.68%
Net Profit (Rs m)	10,353.90	10,783.20	10,471.50	13,236.60	14,368.10	8.54%
Operating Profit Margin	31%	31%	30%	33%	32%
EPS (Rs)	38.07	39.65	38.5	48.67	52.83
Dividend Payout	100%	101%	101%	119%	97%

Source: Company Annual Report

The company achieved consistent revenue expansion through strategic brand investments and increased advertising spending, driving top-line growth.

Profitability metrics showed a mixed but generally positive trends. ROE for FY25 stood at 81%, increasing from 74% in FY24.

At the same time, ROCE 99% in FY25 compared to 121% in FY24. Despite this decline, the metric remains exceptionally high, indicating efficient capital utilisation.

The company maintained strong operating profit margins of 31%, up from 30% previously, reflecting operational improvements through digitisation and continuous improvement initiatives.

Investments in brand building - advertising spending increasing 7% - combined with cost optimisation programs and the use of AI-ML tools, have strengthened its market positioning.

The company focuses on premiumisation, portfolio expansion, and manufacturing excellence to continue to drive sustainable growth.

#3 Waaree Renewable Technologies

The next company in our list is Waaree Renewable Technologies.

It is an Indian Engineering Procurement and Construction (EPC) company with a primary focus on the rapidly expanding renewable energy sector, particularly solar power.

It operates as a subsidiary of the larger Waaree Group, which is recognised as India's largest manufacturer and exporter of solar modules.

Beyond EPC activities, the company also functions as a solar developer, engaging in EPC activities, the company also functions as a solar developer, engaging in the financing, construction, ownership, and operation of solar projects.

Waaree Renewable Technologies generates its revenue predominantly from its solar EPC business, in which it designs, procures, and constructs solar power projects.

The company has strategically expanded its capabilities into Battery Energy Storage Systems (BESS) EPC solutions, diversifying its revenue streams within the broader clean energy ecosystem.

Waaree Renewable Technologies Financial Performance

Waaree Renewable Technologies Financial Snapshot (FY21 to FY25)

Particular	FY21	FY22	FY23	FY24	FY25	5-Year CAGR
Revenue (Rs m)	1,620	3,510	3,509.60	8,764.40	15,977.50	77.21%
Net Profit (Rs m)	20	200	553.3	1,480.40	2,289.20	227.09%
Operating Profit Margin	28%	17%	14%	20%	27%
EPS (Rs)	0.22	1.96	5.71	14.3	22.01

Source: Company Annual Report

The company has delivered strong financial results because of successful project execution, with completed projects surging from 704 MWp in FY24 to 1,524 MWp in FY25.

This operational excellence, combined with a robust unexecuted order book of 3,263 MWp by FY25, shows the company's strong market position and future revenue visibility.

The ROE for FY25 stood at 65.29%, though declining from the 93.39% in FY24. Despite this reduction, the metric remains high.

If we look at the ROE figure, it was 96.35% in FY25 compared to 61.94% in FY24. This performance comes from the company's asset-light business model, which requires minimal fixed capital relative to revenue generation.

The integrated ecosystem benefits from strong parentage through Waaree Energies Ltd, providing cost advantages and module access.

#4 Shakti Pumps (India)

The next stock in our list is Shakti Pumps (India).

It is a prominent manufacturer of pumps and motors, offering advanced water pumping solutions for a diverse range of applications, including irrigation, horticulture, domestic water supply, and various commercial and industrial uses.

Its brand "Shakti" has established a strong reputation and is well-received in both domestic and international markets. Its revenue is diversified across its core product categories such as pumps, motors, and controllers.

The company offers a wide array of pumps, including submersible, solar, vertical multistage centrifugal, mono end suction, pressure booster, wastewater, and open well pumps.

Its motor offerings include submersible, EV, and surface motors, while its controller segment features universal solar pump controllers, Shakti solar drives, Shakti elite soft starters, and hybrid controllers.

A significant revenue driver is solar pumps, where it holds a 25% share under the government's PM-KUSUM scheme, a key initiative promoting rural electrification through solar energy.

Shakti Pumps (India) Financial Performance

Shakti Pumps (India) Financial Snapshot (FY21 to FY25)

Particular	FY21	FY22	FY23	FY24	FY25	5-Year CAGR
Revenue (Rs m)	9,297	11,785	9,677	13,707	25,162	28.26%
Net Profit (Rs m)	756	648	241	1,417	4,084	52.45%
Operating Profit Margin	15.20%	9.40%	6.90%	16.40%	24.00%
EPS (Rs)	6.9	5.9	2.2	12.8	34

Source: Company Annual Report

Shakti Pumps has delivered a strong financial performance. This growth was driven by strong domestic and export performance, with exports growing 52.7% to Rs 4,368 million (m), fuelled by improved demand for solar pumps and the successful implementation of the PM-KUSUM scheme.

The ROE for FY25 is 35.2%, which is significantly improved from 24.5% in FY24. This reflects the company's expanding operating margins and good net profit growth, driven by operational efficiency and cost control measures.

The revenue surge, combined with economies of scale and higher execution rates, has maximised shareholder returns.

ROCE demonstrated exceptional improvement, reaching 43.9% in FY25 from 18.8% in FY24. This indicates the company's disciplined capital management. The term loans were reduced to zero by March 2024 and it had a debt-to-equity ratio of just 0.1 in FY25.

The company successfully raised Rs 2 bn through QIP in FY24, strengthening the balance sheet.

Strong performance in government and export segments, expanded market reach, and unwavering focus on operational efficiencies have created a sustainable competitive advantage.

#5 Premier Energies

The fifth company in our list is Premier Energies, which was established in 1995. It's a Hyderabad-based integrated manufacturer of solar cells and modules.

It holds the distinction of being India's second-largest solar cell manufacturer by installed capacity.

The company also provides comprehensive engineering, procurement, and construction (EPC) solutions, offers operations and maintenance (O&M) services, and functions as an independent power producer.

Its revenue is primarily derived from the sale of solar cells and solar modules. Additionally, the company generates revenue by providing EPC solutions and O&M services for solar projects.

Its vertically integrated operations, which encompass various stages of solar module production and sales, coupled with a focus on both domestic and international markets, are fundamental to its revenue generation.

Premier Energies Financial Performance

Premier Energies Financial Snapshot (FY22 to FY25)

Particular	FY22	FY23	FY24	FY25	4-Year CAGR
Revenue (Rs m)	7,428.71	14,285.34	31,437.93	65,187.45	72.11%
Net Profit (Rs m)	-144.08	-133.36	2,313.60	9,371.32
Operating Profit Margin	7.01%	7.71%	15.93%	28.78%
EPS (Rs)	-0.55	-0.49	8.78	20.79

Source: Company Annual Report

Premier Energy has achieved good results in recent years, with revenue rising 107.35% YoY. After the losses in FY22 and FY23, the company achieved a turnaround from consistent losses, with net profit growing 305.05% YoY.

The growth was driven by the high solar market demand, supportive government policies, including an increase in RPO targets from 29.9% to 43.3% by FY30 and strategic capacity expansions across multiple manufacturing units.

The ROE shows improvement, reaching 53.83% in FY25 from 43,73% in FY24, after recovering from FY23. At the same time, ROCE reached 41.5% in FY25, improving from 25.65% in FY24 and FY23.

Conclusion

We have highlighted the top five companies with high ROE and ROCE spanning across consumer staples and renewable energy sectors, showing how effective capital utilisation can drive profitability and shareholder value.

However, it is crucial to emphasise that the financial market is dynamic, and numerous factors can influence stock performance, but it is not the only reason.

Investors should make decisions with their individual financial goals, risk tolerance, and investment horizon.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...