DuPont Decomposition
Why does ALKEM earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
17.4% = 16.9% × 0.72 × 1.42
Latest: FY2025
Profitability
Net Margin
16.9%
11.4% →16.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.72x
0.18x →0.72x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.42x
1.36x →1.42x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 14.7 pp over 3 years. Driven by net margin improving (11.4% → 16.9%), asset turnover improving (0.18x → 0.72x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 11.4% | 0.18 | 1.36 | 2.7% |
| FY2024 | ₹0Cr | ₹0Cr | 10.4% | 0.19 | 1.51 | 3.0% |
| FY2025 | ₹0Cr | ₹0Cr | 16.9% | 0.72 | 1.42 | 17.4% |
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.