DuPont Decomposition
Why does ABCAPITAL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
10.3% = 7.7% × 0.15 × 8.63
Latest: FY2025
Profitability
Net Margin
7.7%
70.0% →7.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.15x
0.01x →0.15x
Revenue per ₹ of assets
Leverage
Equity Multiplier
8.63x
1.02x →8.63x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 9.5 pp over 3 years. Driven by net margin declining (70.0% → 7.7%), asset turnover improving (0.01x → 0.15x), leverage rising (1.02x → 8.63x). 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 | 70.0% | 0.01 | 1.02 | 0.8% |
| FY2024 | ₹0Cr | ₹0Cr | 11.8% | 0.05 | 8.10 | 4.5% |
| FY2025 | ₹0Cr | ₹0Cr | 7.7% | 0.15 | 8.63 | 10.3% |
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.