DuPont Decomposition
Why does ADSL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
5.8% = 3.7% × 0.91 × 1.72
Latest: FY2026
Profitability
Net Margin
3.7%
12.6% →3.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.91x
0.70x →0.91x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.72x
1.30x →1.72x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 5.7 pp over 5 years. Driven by net margin declining (12.6% → 3.7%), asset turnover improving (0.70x → 0.91x), leverage rising (1.30x → 1.72x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 12.6% | 0.70 | 1.30 | 11.5% |
| FY2023 | ₹0Cr | ₹0Cr | 1.1% | 0.95 | 1.30 | 1.3% |
| FY2024 | ₹0Cr | ₹0Cr | 6.0% | 0.88 | 1.34 | 7.2% |
| FY2025 | ₹0Cr | ₹0Cr | 4.0% | 0.87 | 1.54 | 5.3% |
| FY2026 | ₹0Cr | ₹0Cr | 3.7% | 0.91 | 1.72 | 5.8% |
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.