DuPont Decomposition
Why does AAVAS earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
13.2% = 28.9% × 0.11 × 4.27
Latest: FY2025
Profitability
Net Margin
28.9%
26.7% →28.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.11x
0.12x →0.11x
Revenue per ₹ of assets
Leverage
Equity Multiplier
4.27x
4.10x →4.27x
Assets funded by equity vs debt
Trend Analysis
ROE stable at ~13%. Driven by net margin improving (26.7% → 28.9%). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 26.7% | 0.12 | 4.10 | 13.1% |
| FY2024 | ₹0Cr | ₹0Cr | 24.3% | 0.12 | 4.38 | 13.0% |
| FY2025 | ₹0Cr | ₹0Cr | 28.9% | 0.11 | 4.27 | 13.2% |
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.