DuPont Decomposition
Why does BASF earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
10.6% = 2.8% × 1.77 × 2.13
Latest: FY2026
Profitability
Net Margin
2.8%
4.5% →2.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
1.77x
2.14x →1.77x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.13x
2.62x →2.13x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 14.8 pp over 5 years. Driven by net margin declining (4.5% → 2.8%), asset turnover declining (2.14x → 1.77x), leverage falling (2.62x → 2.13x).
Historical Decomposition
Last 5 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 4.5% | 2.14 | 2.62 | 25.5% |
| FY2023 | ₹0Cr | ₹0Cr | 3.0% | 2.08 | 2.43 | 14.9% |
| FY2024 | ₹0Cr | ₹0Cr | 4.1% | 1.90 | 2.24 | 17.5% |
| FY2025 | ₹0Cr | ₹0Cr | 3.2% | 1.75 | 2.33 | 13.2% |
| FY2026 | ₹0Cr | ₹0Cr | 2.8% | 1.77 | 2.13 | 10.6% |
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.