DuPont Decomposition
Why does AAREYDRUGS earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
2.9% = 0.8% × 1.63 × 2.10
Latest: FY2025
Profitability
Net Margin
0.8%
1.3% →0.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.63x
2.01x →1.63x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.10x
2.16x →2.10x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 2.9 pp over 4 years. Driven by asset turnover declining (2.01x → 1.63x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 1.3% | 2.01 | 2.16 | 5.8% |
| FY2023 | ₹0Cr | ₹0Cr | 0.9% | 1.42 | 2.48 | 3.2% |
| FY2024 | ₹0Cr | ₹0Cr | 1.2% | 1.30 | 2.28 | 3.5% |
| FY2025 | ₹0Cr | ₹0Cr | 0.8% | 1.63 | 2.10 | 2.9% |
How to read DuPont
- • Rising ROE from margin = pricing power, operational improvement (good)
- • Rising ROE from turnover = better asset utilization (good)
- • Rising ROE from leverage = more debt, amplified risk (caution)
- • Falling ROE across all three = structural deterioration (red flag)
DuPont decomposition from audited annual financials. Factual analysis, not investment advice.