DuPont Decomposition
Why does ARIHANTCAP earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
15.3% = 42.2% × 0.18 × 2.05
Latest: FY2025
Profitability
Net Margin
42.2%
5.1% →42.2%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.18x
0.06x →0.18x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.05x
2.10x →2.05x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 14.7 pp over 3 years. Driven by net margin improving (5.1% → 42.2%), asset turnover improving (0.06x → 0.18x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 5.1% | 0.06 | 2.10 | 0.6% |
| FY2024 | ₹0Cr | ₹0Cr | 38.8% | 0.08 | 2.42 | 7.7% |
| FY2025 | ₹0Cr | ₹0Cr | 42.2% | 0.18 | 2.05 | 15.3% |
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.