High ROE stocks in India — return on equity above 20%

Return on equity is profit divided by the shareholders' money in the business (equity capital plus reserves). A company that sustains ROE above 20% is compounding its owners' capital quickly. Two things to check before trusting a high ROE: debt, because borrowed money inflates ROE without making the business better (see the Debt/Equity column), and one-offs, because a single exceptional gain in the trailing twelve months can double it for a year. The ROCE column is the cross-check: ROCE counts debt as capital, so a high ROE with a much lower ROCE usually means leverage is doing the work.