Should Weakness in Ellenbarrie Industrial Gases Limited's (NSE:ELLEN) Stock Be Seen As A Sign That Market Will Correct The Share Price Given Decent Financials?

It is hard to get excited after looking at Ellenbarrie Industrial Gases' (NSE:ELLEN) recent performance, when its stock has declined 40% over the past three months. However, stock prices are usually driven by a company’s financials over the long term, which in this case look pretty respectable. In this article, we decided to focus on Ellenbarrie Industrial Gases' ROE. ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Simply put, it is used to assess the profitability of a company in relation to its equity capital. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. How Do You Calculate Return On Equity? ROE can be calculated by using the formula: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Ellenbarrie Industrial Gases is:10% = ₹929m ÷ ₹9.2b (Based on the trailing twelve months to September 2025). The 'return' is the income the business earned over the last year. That means that for every ₹1 worth of shareholders' equity, the company generated ₹0.10 in profit. Check out our latest analysis for Ellenbarrie Industrial Gases What Has ROE Got To Do With Earnings Growth? Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company’s earnings growth potential. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features. Ellenbarrie Industrial Gases' Earnings Growth And 10% ROE At first glance, Ellenbarrie Industrial Gases' ROE doesn't look very promising. However, its ROE is similar to the industry average of 9.9%, so we won't completely dismiss the company. Moreover, we are quite pleased to see that Ellenbarrie Industrial Gases' net income grew significantly at a rate of 21% over the last five years. Given the slightly low ROE, it is likely that there could be some other aspects that are driving this growth. Such as - high earnings retention or an efficient management in place. We then compared Ellenbarrie Industrial Gases' net income growth with the industry and we're pleased to see that the company's growth figure is higher when compared with the industry which has a growth rate of 8.8% in the same 5-year period. NSEI:ELLEN Past Earnings Growth January 16th 2026 The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock's future looks promising or ominous. Is Ellenbarrie Industrial Gases fairly valued compared to other companies? These 3 valuation measures might help you decide. Is Ellenbarrie Industrial Gases Using Its Retained Earnings Effectively? Ellenbarrie Industrial Gases doesn't pay any regular dividends currently which essentially means that it has been reinvesting all of its profits into the business. This definitely contributes to the high earnings growth number that we discussed above. Summary On the whole, we do feel that Ellenbarrie Industrial Gases has some positive attributes. Despite its low rate of return, the fact that the company reinvests a very high portion of its profits into its business, no doubt contributed to its high earnings growth. Having said that, looking at the current analyst estimates, we found that the company's earnings are expected to gain momentum. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.