DuPont Decomposition
Why does AVL earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
17.0% = 4.4% × 1.82 × 2.14
Latest: FY2026
Profitability
Net Margin
4.4%
3.9% →4.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.82x
2.13x →1.82x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.14x
5.35x →2.14x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 27.9 pp over 5 years. Driven by asset turnover declining (2.13x → 1.82x), leverage falling (5.35x → 2.14x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 3.9% | 2.13 | 5.35 | 44.8% |
| FY2023 | ₹0Cr | ₹0Cr | 4.8% | 2.14 | 4.53 | 47.1% |
| FY2024 | ₹0Cr | ₹0Cr | 4.4% | 1.99 | 1.80 | 15.8% |
| FY2025 | ₹0Cr | ₹0Cr | 4.7% | 1.85 | 2.10 | 18.1% |
| FY2026 | ₹0Cr | ₹0Cr | 4.4% | 1.82 | 2.14 | 17.0% |
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.