Net profit divided by shareholders' equity — how efficiently a company turns shareholder capital into profit.
ROE measures how much profit a company generates for every rupee of shareholder equity invested in the business. A consistently high ROE (relative to sector peers) generally signals an efficient, well-run, competitively advantaged business. It's one of the most-cited quality metrics for long-term investors, though it can be artificially inflated by high debt (leverage boosts ROE without necessarily improving underlying business quality), so it's best read alongside debt levels.