DuPont Decomposition
Why does ADANIPOWER earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
22.4% = 23.1% × 0.50 × 1.96
Latest: FY2025
Profitability
Net Margin
23.1%
51.2% →23.1%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.50x
0.12x →0.50x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.96x
2.87x →1.96x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 4.9 pp over 3 years. Driven by net margin declining (51.2% → 23.1%), asset turnover improving (0.12x → 0.50x), leverage falling (2.87x → 1.96x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 51.2% | 0.12 | 2.87 | 17.6% |
| FY2024 | ₹0Cr | ₹0Cr | 20.5% | 0.14 | 2.14 | 6.3% |
| FY2025 | ₹0Cr | ₹0Cr | 23.1% | 0.50 | 1.96 | 22.4% |
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.