DuPont Decomposition
Why does AVALON earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
15.7% = 7.0% × 1.27 × 1.75
Latest: FY2026
Profitability
Net Margin
7.0%
8.1% →7.0%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.27x
1.43x →1.27x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.75x
6.74x →1.75x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 62.5 pp over 5 years. Driven by net margin declining (8.1% → 7.0%), asset turnover declining (1.43x → 1.27x), leverage falling (6.74x → 1.75x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 8.1% | 1.43 | 6.74 | 78.2% |
| FY2023 | ₹0Cr | ₹0Cr | 5.6% | 0.79 | 2.21 | 9.8% |
| FY2024 | ₹0Cr | ₹0Cr | 3.2% | 0.94 | 1.69 | 5.1% |
| FY2025 | ₹0Cr | ₹0Cr | 5.8% | 1.06 | 1.70 | 10.4% |
| FY2026 | ₹0Cr | ₹0Cr | 7.0% | 1.27 | 1.75 | 15.7% |
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.