DuPont Decomposition
Why does ARE&M earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
12.8% = 7.4% × 1.26 × 1.38
Latest: FY2025
Profitability
Net Margin
7.4%
5.9% →7.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.26x
1.36x →1.26x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.38x
1.40x →1.38x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 1.5 pp over 4 years. Driven by net margin improving (5.9% → 7.4%), asset turnover declining (1.36x → 1.26x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 5.9% | 1.36 | 1.40 | 11.3% |
| FY2023 | ₹0Cr | ₹0Cr | 7.1% | 1.30 | 1.33 | 12.2% |
| FY2024 | ₹0Cr | ₹0Cr | 8.0% | 1.30 | 1.32 | 13.7% |
| FY2025 | ₹0Cr | ₹0Cr | 7.4% | 1.26 | 1.38 | 12.8% |
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.