DuPont Decomposition
Why does AARVI earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
8.0% = 2.0% × 2.37 × 1.70
Latest: FY2025
Profitability
Net Margin
2.0%
4.3% →2.0%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
2.37x
1.90x →2.37x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.70x
1.57x →1.70x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 4.7 pp over 4 years. Driven by net margin declining (4.3% → 2.0%), asset turnover improving (1.90x → 2.37x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 4.3% | 1.90 | 1.57 | 12.7% |
| FY2023 | ₹0Cr | ₹0Cr | 3.4% | 2.71 | 1.47 | 13.4% |
| FY2024 | ₹0Cr | ₹0Cr | 2.8% | 2.34 | 1.47 | 9.7% |
| FY2025 | ₹0Cr | ₹0Cr | 2.0% | 2.37 | 1.70 | 8.0% |
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.