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
10.4% = 5.8% × 1.05 × 1.70
Latest: FY2025
Profitability
Net Margin
5.8%
8.1% →5.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.05x
1.43x →1.05x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.70x
6.74x →1.70x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 67.8 pp over 4 years. Driven by net margin declining (8.1% → 5.8%), asset turnover declining (1.43x → 1.05x), leverage falling (6.74x → 1.70x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 8.1% | 1.43 | 6.74 | 78.2% |
| FY2023 | ₹0Cr | ₹0Cr | 8.3% | 0.23 | 2.20 | 4.2% |
| FY2024 | ₹0Cr | ₹0Cr | 3.3% | 0.23 | 1.70 | 1.3% |
| FY2025 | ₹0Cr | ₹0Cr | 5.8% | 1.05 | 1.70 | 10.4% |
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.