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
4.3% = 3.5% × 0.87 × 1.43
Latest: FY2025
Profitability
Net Margin
3.5%
-22.5% →3.5%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.87x
0.24x →0.87x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.43x
1.30x →1.43x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 11.3 pp over 3 years. Driven by net margin improving (-22.5% → 3.5%), asset turnover improving (0.24x → 0.87x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹-0Cr | -22.5% | 0.24 | 1.30 | -7.0% |
| FY2024 | ₹0Cr | ₹0Cr | 8.0% | 0.23 | 1.34 | 2.4% |
| FY2025 | ₹0Cr | ₹0Cr | 3.5% | 0.87 | 1.43 | 4.3% |
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.