DuPont Decomposition
Why does BAJFINANCE earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
16.8% = 39.3% × 0.09 × 4.71
Latest: FY2025
Profitability
Net Margin
39.3%
27.8% →39.3%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.09x
0.04x →0.09x
Revenue per ₹ of assets
Leverage
Equity Multiplier
4.71x
5.06x →4.71x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 11.0 pp over 3 years. Driven by net margin improving (27.8% → 39.3%), leverage falling (5.06x → 4.71x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 27.8% | 0.04 | 5.06 | 5.8% |
| FY2024 | ₹0Cr | ₹0Cr | 25.6% | 0.04 | 4.90 | 5.0% |
| FY2025 | ₹0Cr | ₹0Cr | 39.3% | 0.09 | 4.71 | 16.8% |
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.