DuPont Decomposition
Why does AVG earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
8.7% = 3.9% × 1.10 × 2.02
Latest: FY2025
Profitability
Net Margin
3.9%
0.2% →3.9%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.10x
1.01x →1.10x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.02x
5.20x →2.02x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 7.5 pp over 4 years. Driven by net margin improving (0.2% → 3.9%), leverage falling (5.20x → 2.02x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 0.2% | 1.01 | 5.20 | 1.2% |
| FY2023 | ₹0Cr | ₹0Cr | 2.0% | 1.04 | 4.54 | 9.3% |
| FY2024 | ₹0Cr | ₹0Cr | 6.7% | 1.07 | 2.24 | 16.0% |
| FY2025 | ₹0Cr | ₹0Cr | 3.9% | 1.10 | 2.02 | 8.7% |
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.