The formula
ROE = Net Profit ÷ Shareholders' Equity, shown as a percentage. ₹20 of profit on ₹100 of equity is a 20% ROE.
How to read it
ROE measures how efficiently a company compounds owners' capital. Broadly: below 10% is weak, 15–20% is strong, and consistently above 20% is compounder territory. The word that matters is consistently — one great year can be a fluke.
Watch the leverage trap: a company can inflate ROE just by taking on more debt. Always read ROE next to debt-to-equity.
We cover good ranges and the ROE-vs-ROCE check in depth in our guide on what a good ROE for stocks is.